BE Informed

The Airing of Grievences: Auditor Behaviors that Client's Dread

Written by Jim Fries | Jan 2, 2025 1:00:00 PM

Auditor Behaviors that Client’s Dread

One of my favorite television shows of all time is Seinfeld. My favorite Seinfeld made-up holiday is Festivus. And my favorite Festivus activity is the Airing of Grievances. In the immortal words of Frank Costanza, “I got a lot of problems with you people! And now, you’re going to hear about ‘em!”In my previous blog, I discussed client practices that drive auditors right up the wall. But the auditor-auditee relationship is not a one-way street. I acknowledge there are things auditors do that provide an extra challenge to clients and cause us to fall short of expectations.

Under the best of circumstances, undergoing an audit is a challenging and stressful experience. You already have a full-time job keeping the books/overseeing the finances/reporting to management/paying the bills and employees, and now you must take on a second full-time job of preparing for the auditors. But there are some behaviors auditors exhibit that can make this process even more daunting. What follows are three of those behaviors along with some honorable mentions. At times, there are good reasons for these actions; if that is the case, I will do my best to explain the reasons behind them. Other times, there are not good reasons, which is an opportunity for improvement.

Communication, Communication, Communication

As I polled my clients, coworkers, and others for input into this article, I received many great responses. In reviewing those responses, many fell under the umbrella of poor communication. Specifically:

  • “Auditors keep asking me for information I already provided.”
  • “The information requests are too vague and general. I’m not sure what you’re really asking for.”
  • “The auditors were on site all week, but they never came and spoke with me. Just kept sending me e-mails.”
  • “The auditors keep coming into my office to ask me questions. I wish they would just send me an e-mail.”
  • “Too many e-mails with single questions. Please consolidate.”
  • “I hate it when I get one huge e-mail with twenty questions/requests. I wish the auditors would ask me questions in real time.”

In reviewing this list of pain points, I realize the first two items are related and the final four items are related.

It is a fair criticism that auditors can request the same information multiple times. Auditors do their best to minimize this phenomenon, but it does occur. Ultimately, the underlying cause is poor communication and/or organization amongst the audit team. In recent years, there have been several workflow solutions that have come on the market, and many CPA firms are now utilizing these to facilitate information exchanges between the auditor and the client. Brown Edwards adopted one such software last year and have found it has greatly reduced the redundancy in our information requests. If I were to revisit this article a year from now, I am hopeful this bullet point would fall off the listing.

The reader will observe the final four bullet points have items that directly contradict one another. This is because all people are different, and we have different ways in which we like to interact. However, I believe this is also largely a generational difference. Earlier this year, I was working on a small not-for-profit audit. One day, the CFO (a younger gentleman) complained to me that the manager kept interrupting him in person. On the very next day, the executive director (an older gentleman) complained to me that the same manager would not stop emailing and he wished she would see him in person. We, as auditors, should do a better job of getting to know our clients and gaining an understanding of his or her communication preferences: whether that client wants frequent or periodic communication, electronic or in-person communication, short or long e-mails, etc. Such an understanding would reduce friction and annoyance between the auditor and auditee and result in a smoother audit.

Turnover of the engagement team

It is no secret the public accounting industry is currently suffering from a talent shortage. During 2020, the industry had its highest staff turnover percentage ever. While that turnover percentage has reduced recently, it is still higher than we would like it to be. From the client’s perspective, however, they are seeing different people each year.

There are two levels at which this turnover presents a challenge to the client. When the manager on the engagement turns over, there is a loss of institutional knowledge. Even if the new manager is highly qualified, technically astute, and has an excellent tool set, he or she still must put in extra work to learn the client, form a relationship, and ask basic questions that consistent staffing would not need to ask. The second type of turnover is at the associate level. Associates typically work on individual audit areas that the manager will then consolidate as they complete the audit. When these associate positions turn over, they are typically filled with newer staff. While these associates are provided significant training, they are still building their work experience. Our clients may feel as if they are the ones having to train our entry-level staff. This adds extra frustration in an already stressful time for our clients.

This is absolutely a valid criticism and one that concerns us. So, what is Brown Edwards doing about it?

  • Taking a harder look at processes and cutting out procedures that do not provide significant audit evidence but are there simply because “we have always done them.”
  • Making greater use of Computer Assisted Audit Techniques (CAATs). Using CAATs, all activity in an account can be audited in many instances. This can be more thorough and less time intensive than sampling items. Brown Edwards is now providing training on this software to all associates rather than to a few “champions.”
  • Continuing to hire as many qualified candidates as possible. I am pleased to say we have been successful in hiring new college graduates and are hopeful this will ease up on compression as these associates gain experience.

Saving lots of questions for the end

This item could be included under the communications section, but I believe this to be common enough and significant enough to merit its own placement on this listing. Consider the following scenario: the auditors came for the week of field work, put in a good hard week, and the client was left feeling like the audit was virtually complete. Then, radio silence for several weeks. The board meeting is approaching, and you have heard nothing. You start reaching out to the manager and get no response. You escalate your inquiry to the partner and are told, “we’re almost done.” Then, with the deadline just days away, you receive a huge listing of questions and new information requests.

This unfortunate occurrence is sometimes unavoidable due to engagement specific circumstances. Other times, it should be completely avoidable, and is the result of poor organization, communication, or oversight. In any audit, there is significant behind-the-scenes work that happens after the team leaves the field. Such work includes wrapping documentation, filling in holes where the information was not provided during fieldwork, drafting the reports and financial statements, and quality control reviews that are required to comply with the firm’s quality control standards. The Quality Control policies of most CPA firms require at least two levels of QC review over all audit work performed. During these QC reviews, it is common for additional questions to arise regarding the sufficiency of work performed or the explanations given by management.

But our back-end process is certainly not the problem of the client. If, as a client, you find yourself always having to ask for status updates instead of proactively being given those updates, that is a failing of the CPA firm. If the client provides all information timely and the auditor does nothing with it, that could be a problem in how the CPA firm is allocating its time and resources. As mentioned above, delays are sometimes unavoidable due to a variety of factors. In these situations, however, we need to be even more proactive in communicating with our clients. We should also provide more training for our staff (and partners) in the areas of client service, communication, and time management.

Honorable Mentions

In addition to the three items above, please find these honorable mentions:

  • “PBC (Prepared by Client) listings that have been blindly rolled forward for 20 years.”
  • “The auditors tell me they can’t work on my audit because they are working on other clients. It makes me feel unimportant.”
  • “When new accounting standards are released, the auditors expect me to learn it and adopt it. Isn’t that what I’m paying the auditors for?”
  • “The staff asks me questions and I’m fairly certain the staff has no idea what he’s asking.”
  • “When the auditor forgets to send the PBC list until the week before.”

Final Thoughts

As I reflect on these last two articles regarding behaviors that make the audit process more difficult, I have come to realize how many of them could be addressed, or prevented altogether, with better communication. While Brown Edwards gives our staff lots of training in many aspects of performing audit engagements, effective communication practices are not often one of them. This is an initiative that would be good for not only Brown Edwards, but the entire public accounting industry, to undertake.

I hope you found this article helpful and entertaining, and that I didn’t sound too much like a curmudgeonly old man. If there are any bad auditor practices that did not make the list, please send them to me at jfries@becpas.com.

Now, I have to go tell some kids how much harder it was when I was their age. . .