Choosing the right auditor: Key considerations for Midlands’ business leaders
Choosing the right auditor is a critical decision that goes beyond compliance. A well-matched auditor brings valuable insights, enhances financial transparency and builds stakeholder trust.
But with so many factors to consider, how should businesses approach this important choice?
Here, Birmingham-based Nikki Davies, KPMG UK’s Head of Private Enterprise (KPE) Audit for the West Midlands, outlines her top tips.
Understanding the selection process
Auditors are appointed in various ways.
While large, listed companies usually follow formal tender processes ending in shareholder votes at an AGM, many smaller businesses opt for informal approaches, relying on recommendations or direct discussions.
The goal however remains the same – finding an auditor whose expertise, scale and approach align with the business’ needs.
Key qualities of an effective auditor
Auditors need strong technical expertise, a solid grasp of financial reporting standards and compliance requirements, and the ability to offer independent, fair challenge.
Their role helps reduce risk and build trust in the company. Clear communication and good collaboration with management are also essential.
Where audit committees exist, auditors should work closely with them to ensure transparency and help shape the scope of the audit.
Top audit teams also work efficiently, using digital tools to offer deeper insights with minimal disruption.
Proximity vs. digital capability
Technology has transformed auditing, allowing much of the work to be done remotely. This boosts efficiency, but in-person engagement still plays a vital role in building relationships and trust.
The most effective audits blend digital capabilities with face-to-face interaction, ensuring both rigour and responsiveness.
The role of sector expertise
Industry experience gives auditors the context to better understand a business, anticipate risks and highlight emerging trends.
Some audit firms also bring in specialist teams when needed, offering tailored insights at key moments in the audit process.
When to consider changing auditors
Regulations mandate periodic auditor rotation for Public Interest Entities (PIEs), with tendering required every 10 years and a complete change of auditor every 20 years.
But even outside these requirements, companies may consider switching for various reasons – growth, a need for new expertise, investor expectations or simply a fresh perspective.
Any change should align with the business’ long-term strategic direction.
Measuring effectiveness
Choosing an auditor isn’t just about signing off financial statements and ticking regulatory boxes.
It’s a strategic choice that can shape a business’s trajectory. Business leaders should ask: Was the process clear and transparent? Were assumptions challenged? Did they use technology to improve insights or efficiency?
The right audit partner brings a mix of expertise, sector knowledge, strong communication and digital innovation, ensuring compliance today and supporting growth for the future.