Despite being considered a stressful and unnerving experience, audits, particularly financial audits, are a necessary quality control measure.
As the leading auditing firm in the UAE explains, periodic audits maintain an organization’s compliance and lead to improvements in operations and decision making.
This article looks at not only the advantages of bringing an external auditing firm onboard but also what characteristics you should look for in a highly qualified auditor.
How can your business benefit from an external audit?
In recent years, the United Arab Emirates (UAE) has seen significant changes in its business economy. The introduction of new tax schemes in the country, primarily through value-added tax (VAT) and excise duty, has shown the woeful readiness of some UAE businesses.
Businesses in the UAE today can ensure they remain compliant with all current statutory obligations, from regulatory requirements to tax obligations, by partnering with experts in the field. But compliance is just one of the major benefits of working with external auditors.
The use of external auditing firms also leads to:
Improvements in productivity
An audit can help your organization root out operation inefficiencies and other profitability killers like fraud and employee theft. Knowing where internal controls and accounting practices are failing can lead to improvements in governance, culture, and efficiencies.
An external audit is an independent verification of the figures being submitted to tax authorities. Confirming that everything is financially sound provides credibility and projects the right image to the organization’s stakeholders, prospective investors, and potential buyers.
Better planning and budgeting
A thorough examination of your organization’s financial accounts can help uncover and identify any errors. This is necessary to maintain optimal internal controls and lead to more effective decision making. Knowing how to better budget for the upcoming year helps improve the organization’s performance.
As important as these benefits are, they can only be realized by working with the right auditing firm.
A well-qualified auditor is fundamental to auditing success. Without knowing what to look for in an external auditor, you may find yourself working with a firm that cannot help your organization focus on the best opportunities for improvements.
The essential traits of a trustworthy auditing firm
There is a baseline set of characteristics that every good auditing firm must possess. This foundation includes a balance of both technical and ethical qualities. But these characteristics are the bare minimum.
What sets good auditing firms apart from the rest are:
1. People skills
Even the most qualified external auditors will sometimes face challenging resistance during the auditing process. Auditors need to master exceptional people skills to communicate their work and manage any disagreements convincingly.
With the audit process often seen as a stressful experience, the auditor must have the ability to build trust quickly. Fostering this ability helps increase the speed and volume of information provided, encourage employees to embrace the auditor’s consultative role, and quickly add value to the business.
Integrity is also an essential skill that excellent auditors possess. Regardless of how thoroughly and rigorously supported the audit reports are, there will be times when auditors will face push back from the organization.
Auditors must demonstrate their integrity in such moments to continue working in a constructive manner.
2. Highly collaborative nature
Great auditors find solutions to complex problems by developing connections with key stakeholders in the organization to establish the most objective audit possible. Balancing strong people skills and being service-oriented enables auditors to provide quality customer service alongside their regulatory requirements.
In this manner, auditors are able to inspire the organization’s management to adopt best practices, generating the best outcome for the business.
While a collaborative nature results in reduced resistance, presenting the results of the audit must be done independently to avoid outside influence or any ethical or legal breaches. Having the ability to understand when to work collaboratively and when to make independent decisions is a crucial characteristic of excellent auditors.
3. Leveraging technology
Successful external auditing firms know that taking advantage of technology results in maximum efficiency, better transparency, and more strategic reporting. The use of technology empowers auditors to achieve better allocation of time and resources, further demonstrating their value.
Leveraging audit technology like data analytics tools allows auditing firms to display their forward-thinking approach. Adopting new technology signals to organizations that the firm possesses a high degree of progressiveness and innovation.
Automating specific auditing processes enables auditors to focus on more value-oriented duties, adding more profound and more genuine value to the audited company.
4. Continuous learning
Speaking of technology adoption, a prestigious and professional auditing firm also recognizes the importance of a commitment to lifelong learning. Auditors with a commitment to continuous process improvements can refine their skill sets and become more adept at leveraging emerging technologies.
Successful auditing firms typically employ a structured learning program to cultivate a culture of curiosity and open-mindedness. Both qualities directly affect their work as auditors as they are capable of remaining inquisitive and making informed judgments about the audited company.
The audited company, in return, benefits from the development of an internal control framework that adopts best practices.
5. Specialization in your industry
Every industry is governed by a particular set of compliance and regulatory requirements. Industry specialization is a critical differentiation strategy of market-leading auditing firms. Working with a firm that has in-depth knowledge of your industry improves audit efficiency and can enhance your business processes while supporting company growth.
Auditing firms with personnel who have a particular industry focus are better able to help their clients navigate the complex business environment. They can quickly analyze the audited company’s operations and distinct accounting policies to deliver high-quality audit evidence.
Choosing the right partner for your auditing needs is not one to take lightly.
Despite many external auditing firms appearing similar, such consulting services can differ significantly. Knowing how to differentiate between a competent audit firm and a mediocre one goes beyond capabilities and experience.
While those qualities are undoubtedly important, other characteristics like those mentioned above must be taken into consideration to ensure that the firm has the right industry expertise and is compatible with your organization.