How can an accountancy firm win more audit business?

Recent reports have revealed a serious lapse on behalf of auditors. According to think-tank Audit Reform Lab, three in four audit reports produced since 2010 have failed to provide warnings that companies, which ultimately collapsed, risked going bankrupt in the year before they ultimately failed. Additionally, Accountancy firms such as Crowe and Grant Thornton have been recently fined £144k and £40k over audit failure. Audit failure naturally affects the reputation of the firm and results in firms losing out on audit business So what can accountancy firms do to win more audit business? Auditor qualifications To be appointed as an auditor of a company, the firm must be a member of recognised supervisory bodies (RSBs) and have formal qualifications and accreditations certifying their ability to perform the required audit tasks. The current RSBs are Association of Chartered Certified Accountants (ACCA), Institute of Chartered Accountants in England and Wales (ICAEW), Institute of Chartered Accountants in Ireland (ICAI) and Institute of Chartered Accountants of Scotland (ICAS). Compliance auditors may have additional accreditations issued by trade bodies or regulatory organisations. Audit company reputation As mentioned above an auditing company needs to have a recognised qualification as the outcomes of an audit rely on the auditor’s skill and credibility. Auditors without any experience or expertise may not be able to conduct an audit in a timely manner resulting in audit failures. The firm’s opinions and conclusions may also not be readily accepted. Companies generally appoint auditors based on the size of the business and its experience because it's easier for them to understand the goals, challenges and pain points within the firm. It also helps companies save money, onboard faster and make informed choices. For instance, Virgin Wines recently appointed Azets as its auditor; as the group was impressed throughout the process with the Azets team's “sector experience, specific audit approach, and references”. Audit quality record Auditing businesses must follow the guidelines and professional standards set out by professional associations. Audit businesses should have internal quality assurance processes in place in addition to being subject to external quality reviews by quality monitoring organisations. Companies must be able to give information on their internal and external quality reviews as well as the steps they took to resolve any problems that came up during the reviews. Companies often evaluate the firm’s audit quality procedures and if accessible, study the audit and quality review reports before hiring its auditor. The report must include a description of how the company ensures that it complies with independence standards and how it ensures that an adequate ethical culture exists inside the firm might be included in the initial request for information from firms. Company and auditor relationship A good working relationship between the audit committee/equivalent, finance director, the finance team, and the auditor is generally a prerequisite for a high-quality audit. There needs to be balance and professional respect without domination. This means that the relationship between the external auditors and the audit committee has to be as strong as the relationship between the external auditors and the finance director/finance team. The auditor must also maintain independence and objectivity. Conflicts of interest have the potential to affect the auditor's decisions or actions and jeopardise their objectivity, which could lower the audit's efficiency and quality. Effective communication Companies look for auditors who are effective communicators and are willing to be engaged in dialogues where they can ask questions, provide suggestions, raise complexities and discuss future steps. Even though the auditor's main responsibility is to draw conclusions and provide an unbiased assessment, shareholders will probably work with the same auditor every fiscal year to audit their statutory accounts and for any additional services they may need. Therefore it is important for auditors to outline how they will be responsive to understanding the firm’s objectives, and be happy to provide clarity and guidance to select the appropriate actions in response to their findings. Depending on the type and frequency of audits needed, some companies also use an audit committee to examine and choose the firms that they believe are the best fit for the business, considering pricing, reputation, and competence.