Why Reviewing Your Auditor Matters
As the new year begins, many boards and finance directors take stock of their governance, financial reporting, and strategic plans. One relationship that is often overlooked until a problem arises is the one with your external auditor. While it may seem like a technical compliance matter, the auditor plays a crucial role in your organisation, providing assurance over financial statements, highlighting risks, and enhancing credibility with investors, lenders, and other stakeholders.
Changing auditors can feel daunting, but reviewing your audit arrangements periodically is not only prudent, it is considered good governance. Just as businesses evolve, their auditors need to be able to keep pace with growth, complexity, and strategic ambitions. A proactive approach can improve transparency, reduce risk, and even bring fresh insights to your financial processes.
Understanding the Role of the Auditor
Auditors do more than check boxes. Their primary role is to provide an independent opinion on the truth and fairness of your financial statements, giving confidence to shareholders, lenders, regulators, and other stakeholders. However, the auditor’s work also extends into areas such as risk identification, internal controls review and highlighting potential compliance issues.
Independence is critical. An auditor must remain objective, avoiding any conflicts that could compromise the credibility of their opinion. If a long-standing auditor is too closely entwined with management, the perception, or reality, of independence may be diminished. This is why boards periodically consider whether a change is necessary, ensuring the audit remains robust and credible.
When a Change Might Be Needed
There are several signs that your organisation might benefit from reviewing its audit arrangements. If your auditor has been in place for many years without rotation, fresh perspective may be required. While longevity can provide familiarity, it can also lead to complacency. A new auditor can challenge assumptions, question processes, and bring industry best practices that might have been overlooked.
Another consideration is the complexity of your business. If your organisation has grown, undertaken acquisitions, changed structure, or introduced new revenue streams, your existing auditor may lack the expertise to handle these developments effectively. Similarly, regulatory changes or sector-specific requirements may necessitate a review to ensure the auditor has up-to-date knowledge and capability.
Other triggers for a change include communication issues or lack of insight. If board members and finance directors feel that reports are delivered late, explanations are unclear, or audit discussions are not adding value, it is worth assessing whether a different auditor could improve the experience and outcomes.
Timing and Practicalities
Changing auditors is not a process to be undertaken lightly, but careful planning can make the transition smooth. The timing of the change is important, particularly for organisations with year-end deadlines or regulatory reporting obligations. Boards often consider initiating the process after the annual accounts have been finalised, providing time to select, appoint, and onboard a new auditor without disrupting reporting.
Professional clearance is required, which involves the outgoing auditor providing formal consent for the incoming firm to take over. While this may seem bureaucratic, in practice it is a straightforward process and part of normal audit governance. Adequate planning ensures that data, historical records, and key contacts are transferred securely and efficiently, minimising disruption for finance teams.
Governance and Independence Considerations
From a governance perspective, a formal review of audit arrangements is considered best practice. Many boards adopt a policy of auditor rotation after a defined period, often every five to ten years, depending on the size and complexity of the organisation. This not only strengthens independence but also demonstrates to stakeholders that the board is committed to oversight and accountability.
Independence goes beyond technical compliance. It influences the tone and quality of audit discussions and enhances the board’s ability to rely on the auditor’s perspective. A fresh auditor can highlight risks that may have been taken for granted, challenge assumptions, and provide reassurance that internal controls and financial reporting processes are robust
Benefits of Reviewing Audit Arrangements
A well-planned auditor review or change can bring several tangible benefits. Firstly, it provides assurance that financial reporting is credible and transparent, which is essential for attracting investors, securing lending, or preparing for strategic transactions. Secondly, it can uncover opportunities to improve processes, controls, and efficiency within the finance function. A new auditor often brings different methodologies, insights, and benchmarks from other clients that can add real value.
Finally, regular review signals to stakeholders, including regulators, investors, and employees, that governance is taken seriously. Demonstrating oversight over audit arrangements strengthens trust and confidence, which can have wider benefits for corporate reputation and decision-making.
How Boards Can Approach a Change
Boards and finance directors should approach auditor changes methodically. The first step is a clear assessment of current arrangements, considering performance, expertise, sector knowledge, independence, and value for money. This assessment can be supported by discussions with the audit committee, finance team, and relevant stakeholders.
Once the decision to review or change is made, a formal procurement process ensures transparency and objectivity. Potential auditors should be evaluated on experience, approach, responsiveness, and cultural fit. Open communication with the outgoing auditor is also essential to ensure a smooth handover and continuity of information.
Starting the Year with the Right Audit Partner
As the new year begins, boards and finance directors have the perfect opportunity to reflect on whether their current audit arrangements remain fit for purpose. Changing auditors does not signal failure; it reflects ambition, good governance, and a commitment to maintaining confidence in your financial reporting.
If your organisation has grown, is considering significant transactions, or simply hasn’t reviewed its audit arrangements in several years, a proactive conversation with us can add real value. A well-chosen auditor brings independence, fresh insights, and confidence, all of which help the board and management make better-informed decisions.
If you are a board member or finance director considering a review of your audit arrangements, it is worth seeking professional guidance early.
We regularly advise UK organisations on auditor reviews, transitions, and governance best practice, helping ensure the process is smooth, compliant, and strategically beneficial.
Start the year with confidence in your audit arrangements – get in touch to discuss whether a review or change is right for your organisation.