Questions to Ask an Auditor
Questions for a business owner, finance lead or audit committee member engaging an external auditor: scope and materiality, where fee overruns come from, and what the opinion will and will not say.
The questions
Open any question for the note
Who from your firm will actually be on site, and how experienced are they?
Why ask it
Audit quality tracks the people on the job more closely than the name on the letterhead. Ask for the split of partner, manager and first-year hours, because a heavily junior team means far more of your own time spent explaining your own ledger.
What is the scope here: a full audit, a review, or a compilation?
Why ask it
These give very different levels of assurance at very different prices, and lenders often specify one without knowing the distinction. Check what your covenant or bylaws actually require before you buy the most expensive version.
How is your fee built up, and what would push it higher?
Why ask it
Quotes rest on assumptions: clean records, a set number of locations, no restatement. Ask which assumptions yours depends on and the rate for work outside them, because that is where every overrun originates.
What is materiality for us this year, and how did you arrive at it?
Why ask it
Materiality is the threshold below which errors go uncorrected, and it governs how much testing happens at all. Firms typically derive it from a percentage of revenue, assets or profit, and the number tells you what will never be examined.
What is on your request list, and when do you need each item?
Why ask it
The client request list is the whole calendar. Getting it early with dates attached is the single most effective way to keep the audit from overrunning, because most delay is documents that arrived late rather than testing that took long.
What risks have you identified in our business, and why those?
Why ask it
Auditors complete a risk assessment before testing anything, and most will share it if asked. Their list, whether that is revenue recognition, inventory or related parties, is an accurate preview of where the hard questions will land.
Which of our accounting estimates are you planning to challenge?
Why ask it
Estimates are where judgement lives: allowances, reserves, useful lives, impairment, accruals. Knowing which ones they intend to push on lets you assemble the support in advance rather than under pressure in week three.
How much of your testing is sampling, and how much covers the full population?
Why ask it
Sampling means most transactions will never be looked at, which is a normal feature of an audit rather than a shortcut. Understanding it prevents both false comfort in a clean opinion and surprise when something surfaces later.
Will you rely on our internal controls or work around them?
Why ask it
This decision changes the shape of the whole engagement. Reliance means walkthroughs and control testing early. Working around them means heavier substantive testing and larger samples, which normally costs more and takes longer.
What did last year's audit flag, and have we actually closed it out?
Why ask it
Prior year findings are the most predictable part of the coming audit, and a repeat finding reads considerably worse than a first-time one. Ask before fieldwork begins, while there is still time to fix something.
What would go in the management letter rather than in the opinion?
Why ask it
The opinion is short and public, the management letter is long and private, and the second is where the content you can use sits. Ask what threshold sends an issue into each, and who on your side receives the letter.
What would cause you to issue anything other than a clean opinion?
Why ask it
Naming the routes to a qualified, adverse or disclaimed opinion in advance turns an abstraction into a checklist. Scope limitations, unresolved uncertainty and disagreement over a treatment are the usual three, and all are worth knowing early.
Is there anything in our numbers that raises a going concern question?
Why ask it
Going concern is the disclosure that moves lenders and boards, and it is assessed roughly a year forward from the reporting date. Raising it yourself gets a candid read before it appears in a draft you have to explain to a bank.
What are you required to ask us about fraud, and who do you have to ask?
Why ask it
Auditing standards require fraud inquiries, and they extend to people outside the finance function, which surprises many managers. Warning your team that the conversation is routine stops it being received as an accusation.
What work are you not allowed to do for us while you are our auditor?
Why ask it
Independence rules restrict the other services an auditor may provide, and the limits around bookkeeping, valuation and internal audit are tighter than most clients assume. Ask before requesting a favour that costs you your auditor.
How long has the engagement partner been on our account, and when does that rotate?
Why ask it
Rotation exists to limit familiarity, and the requirements differ by jurisdiction and by whether you are publicly traded. A long tenure is not automatically a problem, but you should know the number and who else reviews the file.
What has external inspection or peer review said about your firm's work?
Why ask it
Firms are subject to outside review, and the findings say something real about how files are run. Asking is a fair question, and reluctance to discuss it tells you as much as the report would have.
If we disagree with you on a treatment, how does that get resolved?
Why ask it
Technical disagreement is normal, and the escalation route matters more than who is right in the first exchange. Ask whether the firm has a national technical function, how consultation works, and what your options are if you still disagree at the end.
What three things could we change this year to make next year's audit cheaper?
Why ask it
Turns the audit into something you can improve. The answers are usually mundane and effective: closing the books faster, keeping reconciliations through the year, documenting judgements when they are made rather than reconstructing them in March.
What do you see comparable organisations doing that we are not?
Why ask it
Auditors sit inside many similar businesses and rarely volunteer the comparison. Framed as practice rather than benchmarking, this tends to produce the most valuable ten minutes of the entire engagement.
Managing an audit engagement
Practical guidance for the conversation itself
Before fieldwork starts
Turn the request list into a schedule with owners
Every item needs a named person and a date that falls before the auditors arrive. Audits that overrun almost always overrun because documents came late, and the extra hours are billed to you rather than absorbed by them.
Close the books before they arrive, not during
Testing an open ledger produces rework, because the balances move underneath the work. If the close will not be finished in time, say so and move the fieldwork dates instead of starting on schedule with unfinished numbers.
Route everything through one contact
Auditors asking six people the same question get six different answers, and inconsistency generates more testing rather than less. One coordinator who logs what was asked and what was handed over keeps the trail straight.
Keep an audit file all year
One folder for reconciliations, board minutes, contracts, and a short note on every judgement call and its reasoning. Writing down a decision when you make it takes minutes; reconstructing it eight months later takes days.
If you sit on the board or audit committee
Meet them without management in the room
A private session is standard practice and the only setting where some things get said. Ask what management was slow to provide, where the difficult conversations were, and what changed after argument.
Ask about the adjustments that were not made
Auditors keep a schedule of identified misstatements that management declined to correct because they sat below materiality. Reading it, and asking whether the same items recur annually, tells you more than the opinion does.
Look at fee and scope together
A fee that falls while the business grows means hours came out somewhere. Ask what changed in the scope to allow it, and whether the reduction fell on the areas carrying the most risk.
Ask what they would want if they were in your seat
Auditors are constrained in what they can recommend, but most will answer a direct question about what information they would want reported to them monthly if they were responsible for oversight.
During fieldwork, avoid
- Volunteering opinions about colleagues. Answer the question asked, factually, and pass anything outside your area to the person who owns it.
- Guessing at a number to fill a silence. Say you will confirm, then follow up in writing.
- Withholding a document you know exists. Late discovery turns an ordinary finding into a question about integrity.
- Asking the audit team for accounting help they cannot give, since independence rules limit how far they may assist in building the numbers they then have to audit.
- Treating the management letter as a formality. Unresolved points return next year, and repeat findings carry weight with lenders and boards.
- Applying pressure to a conclusion. Arguing a treatment on technical grounds with support is legitimate; pushing for a different opinion is a serious matter for both sides.