As businesses grow and priorities shift, what you need from your auditor often changes too. The company you are running today may look quite different from the one you were running five years ago.
 

Critical analysis of your company’s performance

We are all very busy, in particular the CEOs of busy organisations. I always remember the time I met with a client to discuss the company’s accounts and I commented on the significant change in marketing costs during that year. He hesitated, then asked me ‘Did it increase or decrease?’. He was serious. He had been so busy managing his business that he had not had an opportunity to review expenses on a line-by-line basis and critically review expense movements year to year and consider whether there were valid explanations for the fluctuations. I would urge all company Directors to carefully review the annual accounts and arrange to meet their Auditor to discuss them. This meeting could be held in person, or by MS Teams etc, and would probably take less than one hour. However, in my experience, it is an hour well spent.
 

Walkthrough participation

In order to maximise the value you can take from ‘being audited’ I would recommend that you take some time to understand the audit process and use it as an opportunity to think about your business – how it operates, identify any inefficient processes, and consider where improvements could be made. Your auditor will typically document your systems and controls in key areas such as sales, purchasing and payroll. Auditors refer to this as walkthrough testing. A walkthrough test traces a single transaction through your systems from start to finish and seeks to identify key risks, understand your internal controls, and may result in recommendations for improvements. A walkthrough typically involves inquiry, observation, inspection and reperformance. When senior members of a client organisation participate in a walkthrough exercise it greatly improves the quality of the output. It also allows a senior person, with significant demands on their time, an opportunity to identify where there has been slippage in standards over time, in areas where they had thought an important process was being done in a certain way or sequence, but the actual process had changed over time. This is very important information which facilitates the company’s management team in making changes to processes in order to mitigate risks to the business.

Audit management letter

Typically, when the audit is complete, your auditor may well have recommendations for improvements to your systems and procedures. This takes the format of a letter setting out findings, implications, and recommendations, to improve fraud prevention, operational efficiency etc. These recommendations are coming from an external source, with financial expertise, who understands your business. Any recommendations should of course be considered from a cost-benefit perspective, but they should be considered. Audits are expensive, and any opportunity to extract additional value from the process should be taken and used to improve your business. A good audit should leave you knowing something you did not know before. Something about risk, about process, about where you might be exposed. If it feels like pure compliance, that is a missed opportunity for both sides.

“The best audit relationships are built on curiosity. We want to understand how a business actually works, not just sign off on the numbers. That is when an audit starts adding real value.”

Donagh Waters FCA, Partner, Dains Ireland

 

“A good audit is an investment, not just a cost. When it is done well, you come away with insights that genuinely help you run the business better.”

Deirdre McGinley FCA, Partner, Dains Ireland

If you are nodding along to most of these, you are probably in good hands. But if a few gave you pause, it might be worth a conversation. That could be with your current auditor. Or it could be with someone new.

We are always happy to have an informal conversation. No obligation, no pressure. Sometimes a fresh perspective is all it takes to clarify what you are really looking for.

You can reach Donagh or Deirdre directly, or contact the team to arrange a call.

Email: dwaters@dains.ie | dmcginley@dains.ie
Phone: +353 (1) 840 4029
Or book a call: dains.ie/contact

About Dains Ireland

Dains Ireland, formerly McInerney Saunders, is a full-service accountancy and advisory firm supporting businesses across Ireland. Now part of the Dains Group, the firm is focused on growth, innovation and delivering expert, relationship-led advice to clients navigating an increasingly complex business landscape.

About the authors

Donagh Waters FCA

Donagh is the Audit Compliance Partner at Dains Ireland. He joined the firm in 2005 and has responsibility for overseeing the delivery of the firm’s audit and assurance services. His portfolio includes Irish subsidiaries of multinational groups, SMEs, and not-for-profit organisations. Donagh also holds a Diploma in Forensic Accounting from Chartered Accountants Ireland.

Deirdre McGinley FCA

Deirdre is an audit specialist and Partner at Dains Ireland. She joined the firm in 2015 and was appointed Partner in January 2024. Deirdre has significant experience managing audit engagements across a range of sectors.