Meeting with your auditor at least once per year is a good standard practice for every organization. If you are a larger organization, there may be value in meeting twice during the year – in both the planning and completion stages. Meetings may be in person or via conference call and do not have to be lengthy to reap the benefits of open communication.
There are a number of positive outcomes from this practice:
1) Ability to clarify written reports
- In Canada, auditors are required to report specific matters to clients; some examples of these topics include the amount and nature of errors, significant issues or judgments made and whether any fraud was identified. Often times, this report is provided in writing, but as such, is a one way communication tool. In addition, auditors may provide other suggestions or observations (beyond the financial statements). Meeting with the auditor allows the board to ask questions to ensure there is understanding of the points, and what action, if any, should be taken.
2) Ability to ask questions about any topic
- The auditor has looked at your processes, documents and activities, and has spoken to your employees. Auditors have financial expertise and have typically worked with many organizations. Your auditor can be a great resource to provide ideas or advice on how to improve your operations, save money or help you move forward on a new initiative. One area that is commonly discussed is “how are we doing in comparison to others” – anecdotal comments about benchmarks and operational or internal control standards can help the board frame the organization’s performance and future priorities. A meeting with the auditor can explore these items and assist you in moving your organization forward.
3) Ability to assess the auditor and quality of work performed
- Often times, auditors are hired and evaluated based on the amount of fees they charge. While fees are a key component in engaging an auditor, factors such as knowledge, experience, quality of work, responsiveness, and advice should also be considered. One way to evaluate these qualities is spending time with your auditor talking about your organization.
Finally, we recommend that you hold an “in camera” session when you meet with your auditor. This allows the auditor and the board to speak freely about any concerns or issues without the presence of management. By conducting this session each and every time you meet, it becomes a standard practice known to everyone. Therefore, in the circumstance that an issue arises, there is no undue pressure on either a board member or the auditor to call a “special” meeting as the mechanism for a confidential discussion is already defined.
Other articles on Board Governance to read:
- How big should our board be?
- How often should we review our policies?
- How do I find board members?
- What does oversight mean?
- What does risk management mean?
- What are the top internal control tips for small organizations?
- Donations & Fundraising - what is your policy?
- Why is effective budgeting important?
- Is the CEO doing a good job?
- How much should a not for profit organization hold in net assets?