In the fast-paced and ever-evolving world of business, private company owners often wear multiple hats. From driving growth and managing operations to ensuring compliance and safeguarding assets, the demands are endless. However, one often underutilized resource can provide substantial strategic value: your auditors. Traditionally seen as mere financial watchdogs, auditors can evolve into strategic advisors, offering insights that can drive your business to new heights. Here’s how private company owners can leverage their auditors as strategic partners to enhance existing operations and set up their business for long-term sustainability.

UNDERSTANDING THE DUAL ROLE OF AUDITORS

Auditors are primarily known for their role in evaluating the accuracy of financial statements and assessing compliance with regulatory requirements. However, their expertise extends far beyond the realms of issuing an opinion on a company’s financial statements. With a deep understanding of your business’s financial health, auditors can offer invaluable strategic advice, helping you make informed decisions that align with your long-term goals.

Unlike some business consultants, auditors are required by professional standards to maintain independence and refrain from making management decisions for clients.  However, there are various ways to leverage the work done during your year-end audit as well as other allowable non-audit services that can be provided to enhance a company’s growth.

WHY LEVERAGE AUDITORS AS STRATEGIC ADVISORS?

1. HOLISTIC FINANCIAL INSIGHT

   • Auditors have a comprehensive view of your financial landscape. They can identify patterns, trends, and anomalies that might escape the untrained eye. This deep financial insight can inform strategic decisions, such as where to cut costs, where to invest, and how to optimize cash flow.
   • In addition to an in-depth understanding of your business operations and risks, auditors are also aware of the trends impacting the industries in which they operate and are exposed to other businesses facing similar financial and regulatory obligations.

2. RISK MANAGEMENT

   • Effective risk management is critical for business sustainability. Auditors are already required to assess potential risks as part of the audit process, and these assessments can be valuable to business owners and management when making strategic decisions or identifying areas of improvement. Whether it’s financial risk, operational risk, or compliance risk, their expertise can help you navigate uncertainties with confidence.

3. OPERATIONAL EFFICIENCY

   • Beyond financial audits, auditors can evaluate the efficiency of your operations. They can identify bottlenecks, inefficiencies, and areas for improvement, providing actionable recommendations to streamline processes and enhance productivity.

4. STRATEGIC PLANNING

   • Auditors can play a pivotal role in strategic planning. By leveraging their insights into market trends, competitive landscape, and regulatory changes, they can help you develop robust, forward-looking strategies that drive growth and competitive advantage.

HOW TO TRANSFORM YOUR AUDITORS INTO STRATEGIC ADVISORS

1. TWO-WAY COMMUNICATION

   • Everyone who has been through the audit process has experienced the seemingly endless lines of questioning coming from the audit team. These inquiries allow auditors to gain an in-depth understanding of your business and operations to adequately design and perform their procedures and issue their audit opinion. However, this is also an opportunity for owners and management. These conversations offer a chance for business owners and management to discuss their pain points and what concerns might be keeping them up at night. Depending on the nature of those concerns, the auditors may be able to assist with additional audit procedures within the scope of their audit engagement or provide certain agreed-upon procedures as a separate engagement that management can then leverage for decision-making.

2. ESTABLISH REGULAR MEETINGS OUTSIDE OF THE AUDIT PROCESS

   • Foster a culture of open communication with your auditors. Meet regularly to discuss your business goals, operational and financial challenges, opportunities, and key financial decisions with them. Regular meetings provide an opportunity to discuss ongoing projects, address any concerns, and refine strategies based on the latest insights and data. Keeping your auditors aware of these key pieces of information provides the following benefits to your company:
     • Your auditors can provide insight into any financial reporting or regulatory pitfalls that you need to consider when making key decisions. These insights could include potential tax implications or other downstream risks to operations.
     • When auditors become aware of a significant key decision that will materially impact the business in advance of the audit, they are better able to plan and prepare for their audit procedures, allowing them to more effectively design their procedures and conduct an efficient and timely audit.

3. ENCOURAGE CROSS-FUNCTIONAL COLLABORATION

   • Encourage your auditors to work closely with various departments within your company throughout the audit process. By gaining a broader understanding of your operations, not only can they more effectively address audit risks and complete procedures efficiently, but they can also provide more comprehensive and relevant advice from varying perspectives within the business. Cross-functional collaboration not only enhances the auditor’s ability to appropriately complete their required procedures but also provides an opportunity to offer strategic recommendations aligned with the overall goals of the business.

MERCADIEN: STRATEGIC ADVISORS TO BUSINESSES FOR OVER 60 YEARS

Here at Mercadien, we take pride in our client-centric approach and work closely with our private business owners in a holistic and strategic manner. Our comprehensive service offerings allow clients to leverage our professionals for more than just traditional audit and tax services to grow their business while maintaining regulatory compliance.

Mercadien’s Private Company Services Group specializes in helping private company owners navigate the complex and burdensome financial and regulatory requirements of running a business while also supporting strategic growth objectives and navigating challenges. For expert advice on how to best leverage our expertise, contact us today.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.