Magazine article CMA - the Management Accounting Magazine

Auditor Relations - How's Yours?

Magazine article CMA - the Management Accounting Magazine

Auditor Relations - How's Yours?

Article excerpt

Glenn, owner-manager of a medium-sized manufacturing company, is meeting with Maryanne, the firm's auditor. They're reviewing the yearend financial statements and audit fee. Glenn complains that the statement's too late to be useful and the fee's much higher than expected.

Maryanne recites her problem: delays in receiving information, time-consuming digressions to balance certain records, and difficulties adapting to the company's new inventory valuation approach.

Even though Glenn believes Maryanne, he feels frustrated, angry and trapped. And powerless, as though he's been an unwilling victim. Maryanne too feels victimized. Neither wanted these problems. But here they are, seemingly trapped by circumstances. OR HAVE THEY BEEN TRAPPED BY SOMETHING ELSE?

There is a "something else" beyond the immediate problems. The underlying issue is the client/auditor relationship and not the results. Who could have done what to prevent the "victim experience"? Is someone to blame for the situation?

Who could have done what? The client could have made his expectations clearer: "I wanted my financial statements by April 21." The auditor could have involved her client more fully in the difficulties: "We're having problems getting priced inventory listings from your accounting people. Could you look into this?"

Glenn could have made sure Maryanne was informed about the changes in systems and procedures well before year end.

Maryanne could have met Glenn at the start of the audit to review timing, agree on a completion schedule for both client and auditor tasks, and establish a communications routine during the audit.

Both could have been more involved with each other without disrupting the audit or the client's task of running the business.

Is there someone to blame? It's tempting in most communications breakdowns to think we can assign blame and thereby absolve ourselves. No such luck! It's not simple to assign blame. Consider Glenn and Maryanne's experience:

* Should Glenn have been more proactive OR is Maryanne to blame for not telling Glenn he could share more fully in the audit process? OR had Glenn given the impression of not wanting to be bothered with the audit?

* Perhaps Glenn's staff should have been more diligent in preparing for the auditors, OR had the audit staff implied that regular corporate responsibilities could take priority? …

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