Change Audit Firms the Right Way

By: Bryan Ochalla

One CEO's helpful advice for choosing a new audit firm.

Russ Capps' reason for changing audit firms early last year was straightforward: He simply didn't like the way his former firm handled the process.

Specifically, the audit and tax sides of the firm never seemed to talk to each other. "Because they were so siloed, I would get the same questions from one side that I would get from the other," he says. That was especially annoying and problematic when the firm's employees would visit the Association of Corporate Counsel (ACC), where Capps is CFO, for the fieldwork phase of the audit process.

After deciding to find a new firm, Capps posted a message on the ASAE listserver saying, "If you like your auditor, please let me know." Every firm mentioned in response was added to a spreadsheet, and 13 firms that received more than one recommendation were invited to meet with Capps and a few of his colleagues.

"The firms we got the best vibe from were those that had looked at our statements [included in the request for proposal sent to each candidate] and either pointed things out to us, like, ‘It's strange how you're doing this,' or provided suggestions," he says. In the end, Capps chose a relatively small firm with a clientele made up primarily of associations and other nonprofits.

His advice for anyone considering following in his footsteps: For starters, be honest and upfront while meeting with candidates. "Don't be shy about saying, ‘This is why we're here, and this is what we need to talk about,'" Capps says.

Likewise, share the things you don't like about your current firm. "I definitely mentioned that the main reason I was leaving my old firm was that they were inefficient and, more specifically, that I didn't like the audit and tax sides not talking to each other. I think that helped lay the groundwork for us having a better relationship with the next firm."

Finally, be sure to keep the conversation going even after you've chosen a firm. "Relationship building takes time and effort," Capps says, "so the more the two of you communicate with each other, the better the relationship is going to be in the long run."

Bryan Ochalla is a freelance writer based in Seattle. Email: [email protected]

Bryan Ochalla

Bryan Ochalla is a freelance writer and editor based in Seattle.