Audit Lowe Down – What Should You Look for in an External Auditor?
External audit is often considered to be ‘just a compliance exercise’, however while these financial statements audits are often required to meet legal obligations, they can provide significant value beyond ticking a regulatory box.
An important question is to consider why you are having an audit:
- Is it required by legislation / constituting documents?
- Have your suppliers / customers / funders requested one?
- Board / Management has chosen to have an audit for good governance practices.
The reason for your audit can shape what you need from your auditor.
Look for an auditor with industry experience and if you are a not-for-profit or small business entity then experience in that sector is critical.
An external auditor should not only understand your organisation’s unique challenges but also bring insights in relation to financial risks in your industry and best practice improvements.
Remember an external auditor needs to be independent so be careful about using someone with a particular relationship with the entity even if they do offer to do the work for a cheap price.
An external doesn’t just identify material errors; they offer practical advice for improving financial management and help foster a culture of transparency and accountability. An effective audit can strengthen internal operations and bolster the confidence of donors, investors, and regulators in your organisation’s financial health.
If you don’t need a financial statement audit, then consider using an auditor to perform work on specific areas to provide detailed recommendations and provide an opinion on accuracy over key systems. This work is equivalent to an internal audit project where the auditor does not need to be independent and can agree the scope with management, this could cover financial and non-financial areas such as payroll, purchasing system, compliance with specific standards (e.g. child safety, health and safety, privacy).
Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.
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