Auditing, when done right, is supposed to provide a protective seal between a company and its financial performance claims, and stakeholders, including investors, employees, banks, regulatory bodies, etc. Yet in a record breaking year for audit fines in Ireland, is something not working? Is there anything accountancy practices can do to make audits run smoother? Can we communicate and use emotional intelligence in a more effective way?
Back in March 2022, BNY Mellon Fund Services (Ireland) DAC landed a sizeable €10,780,000 fine and was slapped on the wrist by the Central Bank of Ireland for regulatory breaches relating to outsourcing. Weaknesses within BNY DAC’s outsourcing framework were identified years ago by the Central Bank, and despite protracted supervisory engagement, the accountancy team failed to take action. As service providers, accounting practices need to start building awareness that auditors are not adversaries but advisors, looking to protect our clients’ businesses from potential long-term threats to sustainability and proper financial record keeping, which keeps a business in check.
Let’s look at three ways how medium to large sized accountancy practices can ensure a stress-free audit.
1. Preparation is key
To ensure an effective audit for your clients, you can save yourself a lot of hassle by sending your checklist of deliverables well before arriving on site. Items like bank statements, last five transactions before year end and first five after year end, plus a good bulk of accounts receivable can be prepared from January onwards. You can inform your clients that you plan to look at particular accounts in detail, so that they have some time to prepare the concomitant documents.
2. Communication skills
Strong communication is one of the hallmarks of a good external auditor. The ability to articulate a clear point of view on issues is often deemed by clients as more important than technical skills. A good audit team can avoid many audit pitfalls with succinct and direct lines of dialogue, which might help you and your client avoid fines for missing something important. This becomes particularly important around any issues that arise where there is a difference of opinion. You will need to be respectful, yet clear and assertive in areas of contention.
3. Emotional intelligence
Often medium to large sized accountancy practices will run an audit with a cool, calm, and collected mindset, but what about the human side? Given that this is probably the most stressful time of the year for your clients, with tensions running high, they will need the steady hand of an auditor who can use emotional intelligence to empathise and reassure them that everything is fine and under control, and that they have nothing to worry about.
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