An annual audit is required for all companies registered in Ghana. Each year, businesses of all shapes and sizes must hire an external auditor. And many struggle to make this decision.
So, what must you consider as you search for an appropriate financial statement auditor? Let’s find out.
Think about the following:
The factors to consider are your objectives, the capability of the auditor, their approach to the audit, and the fee.
Your objectives
What do you want to use the audited financial statement for, besides complying with the law?
A financial statement audit has basic objectives, but you can achieve other goals with the audit. So, you must be clear on what other goals you want to achieve.
Auditor capability
- License – Is the auditor licensed by the Institute of Chartered Accountant? You can check the status of a potential auditor with ICAG.
- Qualification and experience – Does the audit team have proper qualification and experience? Have they worked with similar clients and industries? An auditor must be suitably qualified.
- International association – Is the firm in an international accounting network? Membership of an international accounting network gives assurance about the standards of the auditor.
- Independence – Is the auditor independent of the company? They must not have any relations with the organization or conflicts of interest.
Auditor approach
- Procedures – How do they carry out the audit? Does the approach meet audit standards?
- People – It’s important to know how many people will be on the job, their rank, experience and time needed. Do they have the necessary specialists on the team? If your business uses sophisticated IT systems, you should expect the audit team to include IT audit specialists.
- Availability and timing –The auditors must confirm when they will be available, how long they will take, and when the various phases of the audit will begin.
The fee
- Terms and Fees – What is the fee for the audit, and what are the payment terms? How much the audit will cost, and the terms of the engagement are major
- Value-Adding – Find out how they will enhance the audit.
Next Steps
After considering the above, develop a list of potential providers and invite them to submit proposals for the audit.
Assess the proposals, taking the above factors into account. Weigh everything carefully and do not decide based on fees alone. Making a decision based only on how much it costs may lead to hiring the wrong auditor.
In Summary
Choosing an auditor is an important decision. But if you think of the issues discussed in this blog post as you make your decision, you should make the right choice.
Written by James Etu
James is a manager and an audit analytic specialist in the audit unit of SCG Chartered Accountants.
