Audit as an investment – how to choose an audit firm?

This article addresses the following questions:

• What factors affect the cost of a statutory audit of a company's financial statements?
• When should a business start the process of selecting an audit firm?
• Who is responsible for appointing the firm to perform the audit of an entity?

Choosing an audit firm is a crucial decision for business owners and those in charge of an organisation's finances. The quality of the cooperation with the auditor determines not only the accuracy of the financial statements but also data security and the company's reputation in the market. Unfortunately, in practice, the auditor selection process can be fraught with pitfalls that may lead to unnecessary additional costs, internal organisational disruption, conflicts of interest, and even violations of law. What are the most common mistakes made when choosing an audit firm in Poland, and how can they be avoided?

When selecting an audit firm to audit your financial statements, avoid the low-price trap

One of the most common mistakes made by entities preparing for an audit is choosing an auditor solely on the basis of price. Unfortunately, many companies still believe that auditing financial statements is a burdensome obligation and an additional expense that should be kept to minimum.

However, it is worth remembering that effectively leveraging the knowledge and conclusions drawn from a properly conducted process by statutory auditors or audit firms is also an investment in the security and development of the organisation.

When comparing quotations, it is advisable to consider what is actually included in the fee, especially in the case of quotations that fall below the market average. On the one hand, low fees may result from the audit firm's structure and lower engagement costs, but on the other hand, they may also indicate the audit team's lower involvement in the performance of the required procedures or a lack of sufficient experience. When evaluating entities authorised to perform these tasks, it is also worth considering the competences, expertise and the proposed cooperation model.

Review the experience and industry expertise of statutory auditors

If statutory auditors or audit firms are unfamiliar with the specifics of a given industry, they may fail to identify relevant risks or apply an audit strategy that is not adequately tailored to the organisation's needs. Therefore, during the selection process, it is advisable to check whether the team has experience working with similar entities and whether it holds the necessary professional qualifications. As a matter of good practice, the prospective team should also be asked to provide credentials.

Establish clear communication rules with the audit team

Smooth exchange of information with the audit team is crucial to ensure seamless collaboration. Clear communication (not only in Polish but also, where necessary, in English) minimises the risk of misunderstandings and facilitates timely completion of audit activities, particularly in the case of large entities or companies belonging to international groups.

Equally important is the actual availability of the audit team, especially in the context of meeting agreed-upon deadlines. An overstretched audit team may be unable to complete the audit within the required timeframe, which can adversely affect other processes within the organisation, such as the approval of financial statements and compliance with reporting obligations to banks or within the capital group.

Even at the stage of discussions with a prospective service provider, it is worth paying attention to their communication style, openness to dialogue and willingness to clarify any concerns. If other departments within the organisation have previous experience of working with a particular firm – for example as a result of financial process optimisation projects conducted as part of internal audit activities – such experience should also be taken into consideration.

Make sure the audit firm is appointed in line with legal requirements

Pursuant to Article 66(4) of the Polish Accounting Act, the audit firm is appointed by the body approving the entity's financial statements. This is most often the shareholders’ meeting or the supervisory board. The head of the entity – the management board – does not have the authority to make decisions independently unless the Articles of Association or other regulations provide otherwise.

Additionally, it is important to ensure that the selected audit firm meets the independence requirements specified in the Act on Statutory Auditors and Polish National Standards on Auditing. Failure to comply with these requirements may result in regulatory sanctions and undermine the credibility of the financial statements.

Start the auditor selection process at the right time

Leaving the search for an audit firm until the last minute is a risky strategy. Under time pressure, it becomes easy to overlook important aspects of the collaboration. Therefore, the selection process should be planned well in advance, allowing sufficient time for discussions, negotiations and the evaluation of proposals. Starting the process early also enables better preparation of documentation and facilitates the collaboration, for example, thanks to the auditor’s attendance at the inventory count. It is worth emphasising that the absence of the statutory auditor at this stage may prevent them from obtaining sufficient audit evidence regarding the existence of assets, which in turn may necessitate repeating the process (and entail additional costs) or affect the opinion expressed in the concluding auditor’s report.

When selecting an audit firm to review your financial statements, put quality first

Choosing an audit firm is a crucial decision, significantly impacting the security and reputation of an organisation. By treating this process as the choice of a business partner, entities increase the likelihood of establishing a valuable collaboration that goes beyond mere compliance with statutory requirements and provides meaningful support for future growth. An experienced auditor can suggest ways to streamline internal control processes and policies, as well as highlight risks arising from legislative changes. For this reason, the audit should be viewed not merely as a compliance exercise, but as an investment in the future of the business.