Changing Independent Auditors
There are a number of reasons why a company would choose to change its third party CPA firm from one year to the next. From the point of view of a creditor doing business with the company, many of the reasons for making such a change are completely benign. However, when a customer changes CPA firms, it is important for the credit manager to try to learn why.
One of the most common reasons given is a desire to lower auditing costs. While this motive may seem logical, prudent and benign, it may have implications on the scope or the quality of the audit. The creditor's concern is that a cut in auditing fees may result in a cut in the scope of the audit or a rush job in which quality is sacrificed for cost savings. Creditors should carefully compare the certification of the new CPA with that of the former audit firm.
Changing CPA firms may be prompted by a difference of opinion between the CPA and company management regarding the treatment of one or more items in the audit. A difference of opinion can result in a decision to change auditors - perhaps hoping that the new auditor will be more flexible about the items for which the company being audited is hoping for a different interpretation or analysis under U.S. Generally Accepted Accounting Principles.
© 2010 by Michael C. Dennis. All Rights Reserved.