The annual audit process remains a significant source of stress for both municipal finance teams and auditors alike. During a recent Brown Edwards webinar, partner Jim Fries addressed the sometimes contentious relationship between auditors and their clients, offering insightful solutions to transform the audit experience from an adversarial procedure to a collaborative partnership. This blog expands on those practical solutions to help both sides build better working relationships.
The Communication Challenge
In polling during the webinar, participants identified communication issues as a fundamental pain point. This manifests in multiple ways – from auditors requesting the same documents repeatedly to clients responding with radio silence when information is requested. The frustration these communication breakdowns cause can poison otherwise productive relationships.
Four Key Strategies for Improvement
1. Establish Communication Preferences Early
One of Fries' most valuable insights was that auditors rarely ask clients how they prefer to communicate. This oversight leads to misalignment from the start.
For Auditors:
- During planning meetings, explicitly ask each key contact about their preferred communication method (email, phone, virtual, in-person)
- Document these preferences and share them with the entire engagement team
- Note frequency preferences – some clients prefer consolidated periodic communications, while others want to respond to requests in real-time
- Consider creating a communication plan as part of your audit planning process
For Clients:
- Proactively share your communication preferences rather than waiting to be asked
- Be specific about who should be contacted for different areas
- Clarify your organization's approval process for information sharing
- Communicate any periods when you'll be unavailable or especially busy with other priorities
As Fries noted in the webinar, some finance professionals prefer email communication they can respond to when convenient, while others find face-to-face conversations more efficient for complex questions. Neither approach is inherently better – the key is alignment.
2. Implement Regular Status Meetings
Perhaps the simplest yet most effective recommendation is to establish recurring check-in meetings during the audit wrap up process.
Benefits:
- Creates accountability for both parties to make progress between meetings
- Prevents misunderstandings about "whose court the ball is in"
- Allows for quick clarification of complex questions
- Builds relationship through regular interaction
- Reduces frustration by providing a predictable forum for updates
Implementation Tips:
- Schedule brief (15-30 minute) weekly or bi-weekly meetings
- Use a consistent agenda format that covers:
- Progress since last meeting
- Open items and who is responsible
- Roadblocks requiring attention
- Timeline updates
- Consider including both operational staff and leadership periodically
- Continue these meetings until the audit is completed
Fries emphasized that these meetings make it "much harder to be frustrated or upset with somebody if you're looking them in the face and seeing that they are also concerned with getting that engagement done."
3. Preparation is Key to Success
Lack of preparation on either side creates cascading delays and frustrations throughout the audit process.
For Clients:
- Begin gathering PBC (Provided by Client) items weeks before fieldwork
- Use a secure portal to upload documents as they're ready rather than waiting until the last minute
- Create a preparation checklist for recurring audit items and start the process earlier each year
- Document complex transactions or accounting changes throughout the year rather than reconstructing them during the audit
- Consider reaching out to auditors midyear about unusual transactions for early guidance
For Auditors:
- Complete preliminary work, risk assessments, and control testing before final fieldwork
- Ensure all team members understand the client's operations and industry
- Proform financial statements
- Identify potential audit issues during planning rather than during fieldwork
- Prepare clear, specific document requests with examples
Fries described the "auditor's dream" as arriving on day one to find all requested information organized and ready. This level of preparation significantly reduces the time and stress involved for both parties.
4. Practice Empathy and Extend Grace
Perhaps the most meaningful of Fries' recommendations was to approach the audit relationship with empathy and understanding.
Practical Applications:
- Assume positive intent when communication lapses occur
- Recognize that both sides are under pressure from competing priorities
- Acknowledge the human element in the professional relationship
- Consider the experience level of the person you're working with and adjust accordingly
- Provide context for requests to help the other party understand their importance
- Express appreciation when the other party makes extra efforts
Fries shared two guiding principles: "Every person on this planet knows something that you don't know, and therefore, every single person on this planet is your teacher," and Stephen Covey's "Seek first to understand and only then to be understood."
These perspectives encourage both auditors and clients to approach interactions with humility and a genuine desire to understand before jumping to conclusions about motives or competence.
The Special Challenge of Staff Turnover
Both the auditing industry and municipal finance departments face significant turnover challenges. This reality requires additional attention to relationship management.
Strategies for Managing Turnover:
- Create detailed documentation of processes and historical decisions
- Implement formal knowledge transfer protocols when staff changes occur
- Build relationships at multiple levels within both organizations
- Develop onboarding guides specifically for the audit relationship
- Consider recording training sessions about complex areas for future reference
As Fries noted, when a new controller responds to questions with "I don't know, I wasn't here, but I'll research it and figure it out" rather than simply "I don't know, I wasn't here," it demonstrates a commitment to the process that encourages auditors to be more helpful in return.
Beyond the Annual Audit: Building Year-Round Relationships
One of Fries' more insightful recommendations was for auditors to reach out to clients during non-audit periods. These touchpoints build stronger relationships without the pressure of the formal audit.
Opportunities for Engagement:
- Schedule mid-year check-ins to discuss industry developments
- Offer training on upcoming accounting standards
- Create forums for clients to meet and learn from each other
- Share relevant articles and resources
- Establish a quick-question policy where clients can get guidance without triggering billable time
Fries described these meetings as "some of my favorite meetings of the year" because they allow for a "freer flow of ideas" without the audit "hanging over our heads."