29 May 2025
By Lyn Niccolls, Partner at KPMG UK.
Choosing the right auditor is a critical decision that goes beyond compliance. A well-matched auditor brings valuable insights, enhances financial transparency and builds stakeholder trust.
But how should businesses approach this important choice?
Understanding the selection process
Auditors are selected in various ways. While large, listed companies usually follow formal tender processes ending in shareholder votes at Annual General Meetings, many smaller businesses opt for informal approaches, relying on recommendations or direct discussions.
Regardless of the method, the goal remains the same – finding an auditor whose expertise, scale and approach align with the business’ needs.
Key qualities of an effective auditor
Auditors need strong technical expertise, a solid grasp of financial reporting standards and compliance requirements, and the ability to offer independent, fair challenge. Their role helps reduce risk and build trust in the company. Clear communication and good collaboration with management are also essential.
Where audit committees exist, auditors should work closely with them to ensure transparency and help shape the scope of the audit.
Top audit teams also work efficiently, using digital tools to offer deeper insights with minimal disruption.
Proximity vs. digital capability
Technology has transformed auditing, allowing automation of the routine parts of the work and the use of AI to focus the testing on the risk areas. It has also allowed remote access to a global network of resources. This boosts efficiency, but in-person engagement still plays a vital role in building relationships and trust.
The most effective audits blend digital capabilities with face-to-face interaction, ensuring both rigour and responsiveness.
The role of sector expertise
Industry experience gives auditors the context to better understand a business, anticipate risks and highlight emerging trends. Some audit firms also bring in specialist teams when needed, offering tailored insights at key moments in the audit process.
Ensuring fair pricing
Audit fees should be transparent and reflect the complexity and effort involved. It’s important to get clear cost breakdowns and real-time tracking to monitor progress.
That said, price shouldn’t be the only deciding factor. The real value of an audit lies in the quality, insight and rigour the auditor brings.
When to consider changing auditors
Regulations mandate periodic auditor rotation for Public Interest Entities (PIEs), with tendering required every 10 years and a complete change of auditor every 20 years. But even outside these requirements, companies may consider switching for various reasons - growth, a need for new expertise, investor expectations or simply a fresh perspective.
Any change should align with the business’ long-term strategic direction.
It is key to engage with the firms that will be requested to tender for the audit well ahead of the tender timing. This would allow them to plan capacity to put forward their best people for the tender and ensure they are independent when it starts.
Measuring auditor effectiveness
Beyond signing off financial statements, an effective auditor adds strategic value. Business leaders should ask: Was the process clear and transparent? Were assumptions challenged? Did the auditor use technology to improve insights or efficiency?
A quality audit builds resilience and supports sound decision-making.
Conclusion
Choosing an auditor isn’t just about ticking regulatory boxes. It’s a strategic choice that can shape a business’s trajectory.
The right audit partner brings a mix of expertise, sector knowledge, strong communication and digital innovation, ensuring compliance today and supporting growth for the future.
