We auditors love to provide extra value to our clients. How? Many times we do so in management letters.
But have you ever come to the close of your audit and had no ideas? Maybe you’ve heard your audit team say, “hey, what should we include in the management letter?” A better alternative would be to hear, “man, I have so many great recommendations, I’m not sure which to use.” Having numerous ideas is a possibility if we know where to look.
Nuggets of gold lie along our audit path. But how do we find them?
I’m not sure why, but many companies do not ask their employees for new ideas. If they did, they might find a goldmine. So if management isn’t digging up those particular elements, shouldn’t we? (And you can do so with one easy step.)
While performing walkthroughs (a risk assessment procedure performed early in the audit), ask each interviewee, “if you had a magic wand and could wave it over your department, what one thing would you change?” You’ll get great ideas, and the person providing the information will be glad that someone is listening to and valuing their ideas. Then summarize those nuggets of wisdom in your audit file (near the location of your management letter). While you may not use every suggestion, assay each thought and consider it’s value.
Doesn’t it make sense that my client’s staff would possess better ideas than me? After all, they are there every day, and many have worked with the client for years. I’m only there a few days, so my inside knowledge is limited. By asking for my client’s ideas, I am just tapping into the latent knowledge and expressing it in the management letter.
Try this, and I promise, you’ll strike gold.
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Charles Hall is a practicing CPA and Certified Fraud Examiner. For the last thirty years, he has primarily audited governments, nonprofits, and small businesses. He is the author of The Little Book of Local Government Fraud Prevention and Preparation of Financial Statements & Compilation Engagements. He frequently speaks at continuing education events. Charles is the quality control partner for McNair, McLemore, Middlebrooks & Co. where he provides daily audit and accounting assistance to over 65 CPAs. In addition, he consults with other CPA firms, assisting them with auditing and accounting issues.
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