This article was originally published on July 21, 2022, and has been updated.
Choosing the right audit firm for your expansion plans
As a growing company, you may be contemplating geographic expansion or new avenues of financing. Perhaps you’re considering an acquisition or entering new markets or service areas. Whatever exciting growth initiative you pursue, it’s essential to have an auditor with the requisite geographical reach, as well as the business and industry experience and insights to support your financial reporting needs.
Consider the following criteria when selecting an audit firm for your growing company.
1. An auditor that can service you through your growth
You may be focused on the challenges and opportunities you face today, but do you know what is coming as your business expands and grows? Perhaps you are on the verge of making acquisitions, expanding internationally or entering new markets. As your business grows, matures and becomes more complex, an audit firm that can support your evolution will provide insights about the necessary financial reporting and related challenges.
For example, consider a growing company in the software industry with an innovative software solution to a complex problem. To exploit this market opportunity, the company needs to expand into cloud-based distribution of its software. Such a change could have a significant impact on the timing of your revenue recognition.
Another challenge involves the financial reporting necessary when, for example, a services company is diversifying into new areas. It begins to partner with other companies in those new markets in order to exploit opportunities, entering into complex contractual arrangements. The revenue recognized under these arrangements would be affected by whether the company is a principal or agent in the arrangements.
Your auditor can provide the requisite guidance to help you carefully consider the relevant facts and circumstances in making the appropriate financial reporting determinations.
2. Deep industry knowledge
While many aspects of financial reporting are consistent from industry to industry, there are industry-specific nuances too.
Auditors who are steeped in a particular industry can help you navigate the intricacies of industry-specific accounting issues, the latest developments and best practices. Additionally, auditors with extensive experience in your industry understand relevant benchmarks and can point out areas of focus for your business.
An audit firm should have command of industry trends and cultivate its auditors’ industry knowledge through formal and informal internal education programs. An audit firm with industry specialists is more capable of anticipating relevant specific requirements common to your industry—today and in the future.
