It’s important to think of your business as a person – it needs check-ups, check-ins, and TLC. Part of running a successful, healthy business is doing the required audits to ensure that it’s functioning in all areas. However, choosing an auditor isn’t always an easy process.
When we were kids sitting in class and the teacher asked what we wanted to be when we grew up, most of us didn’t jump at the option of being an accountant. The job was seen as safe and pretty boring. Well, that has all changed. Many accountants now have lifestyles of the rich and famous, and clubs where they rub shoulders with high rollers. Accounting students now line up to get jobs at one of the Big Four firms – PwC (PricewaterhouseCoopers), Deloitte, KPMG, and Ernst & Young.
In 2015, the then chairman of KPMG, Simon Collins, opened Number Twenty in Mayfair, London, where clients could meet and mingle. This affluent club was opened only a few years after the devastating 2008 financial crisis. The crisis was the worst since the Great Depression of 1929.
Thousands of people and families lost their homes, their savings and everything that they had worked towards due to the negligence of those in power. Auditors were criticised for their role in the crisis but received nothing more than a slap on the wrist.
Bear in mind that these are also the people who set the auditing laws that we need to abide by – with a smile on our faces nogal. Auditing is part and parcel of owning a business so there is no escaping their laws.
These big accounting firms control the monopoly across the globe, and they are free to set their price. These four companies audit 97% of all US public companies and all the UK’s top 100 corporations. PwC revealed that they made $35 billion in 2015. It has since gone up.
However, if you do a quick Google search on the Big Four accounting firms in the world you’ll be shocked to see nothing but negativity and scathing headlines. In South Africa the Big Four have faced their own scandals and in 2018, South Africa was rocked by the Markus Jooste/Steinhoff fraud scandal – it has been dubbed the biggest case of corporate fraud in South Africa.
In an article that was published in BusinessLIVE last year, it was pointed out that the level of auditing in South Africa has deteriorated drastically over the years. In South Africa, the Independent Regulatory Board for Auditors (Irba) is responsible for auditing the auditors in South Africa.
Charles Nel, the technical manager of the Institute of Internal Auditors SA, highlighted a few issues with the auditing system in SA. “Companies like KMPG and PwC are part of the issue in SA and the public are quick to jump at companies like them when issues and scandals arise. However, it is also the responsibility of the leadership in businesses. All involved must be held accountable. If governance isn’t put in place, then South Africa will be seeing more Steinhoff cases.”
With so much doom and gloom relating to auditors, locally and internationally, we must ask ourselves: “What are we going to do moving forward?”. Whether you own a big business or a small business – the financials and auditing of your business play an integral part of its wellbeing.
To avoid seeing your business’s name in the Google searches related to an accounting scandal these tips will put you in the right direction when looking for someone you can trust the well-being of your business with.
1. Do your research
How your business is registered determines the process you will need to go through when finding an auditor. The most important part of finding an auditor is the research you do. Make sure you exhaust all your options and be thorough with your research.
2. Local is lekker
When doing your due diligence for finding an auditor, meet them in person. It doesn’t need to be a drawn-out process and it will give you a feel for the person and the firm they work for.
By meeting the auditing team in person, you eliminate wasted time – forget lengthy email chains, Skype sessions, and drawn out awkward phone calls. The auditing team you hire needs to compliment your office culture. If you have a creative, chaos space you need to hire an auditor who can work under those circumstances.
3. But do they get you?
The auditor you hire needs to have experience in your specific industry. Hiring someone who has worked within your industry will eliminate unnecessary teething issues.
Don’t be afraid to ask for proof of the work the auditor has done in your field. You have to send a CV when you apply for a job.
4. Communication is key. Full stop.
Just like any relationship in your life – an open line of communication is key. An honest firm will be upfront and honest about extra costs or issues they may encounter. You need to be able to sit with your auditing team and discuss issues, processes and methods of overcoming obstacles. This should be a standard, not a perk.