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Why face-to-face meetings with your auditor are important

11/9/2020

When you work with an accounting firm, you want to have a trusted advisor—someone you can confide in and who will keep your business’s best interests in mind. In 2020, developing that relationship has been tough. With limited face-to-face interactions and more digital conversations, 415 Group Director Jeff Buckshaw, CPA, MSA, explains how auditor meetings have changed during the COVID-19 pandemic.

By
CPA, MSA

As businesses began to temporarily close during the pandemic, 415 Group started working from home. During these spring and early summer months, not much could be done in person. We utilized conference calls and video calls more than ever before. And now as places are slowly opening back up, we are still leaning on digital technology.

Overall, not much was halted, and in fact some aspects of day-to-day work were improved. However, the major components of being a trusted advisor—building that relationship and the ability to read a client’s body language—were stunted.

I joined 415 Group earlier this year, so getting to know our accounting clients during a pandemic hasn’t been as simple as in the past. Thankfully, many clients adapted to video calls. Instead of talking at a speaker in the middle of the room, we were able to see each other during the meeting. This also helped with reading body language. This ability can be very important during an audit.

Reading a client’s body language isn’t as involved as monitoring other players during a competitive poker game. Instead, it’s what many people do on a daily basis. If a glazed look overcomes the person you’re speaking with, it could be that you need to explain what you’re telling them in a different way. People often don’t want to admit that they don’t understand something.

Another use of reading non-verbal cues is when you notice a client getting defensive or not answering certain questions. This doesn’t necessarily mean that there is an underlying problem, but most likely there is a bigger issue that needs discussed. This loops back into building a relationship between the client and trusted advisor.

An example of how this will come together is when working on the inventory portion of an audit. Usually, inventory observations are done on location, so we can walk around with the client and verify their counts. Yet COVID-19 precautions don’t always allow us to meet at a client’s facility. Instead, we are developing potential ways to complete remote inventory observations.

Through technology such as Zoom and FaceTime, we could connect with a client who would walk around and show us the counts. If it were decided that we should meet in-person, we would minimize contact as much as possible while maximizing our time on site.  We are requesting more information up front that could be worked on from our offices. Then, while on site, we would simply look at the audit evidence we needed.

The methods we are implementing during the pandemic most likely won’t completely go away once the virus is gone. We are finding that they can save us time and our client’s money—for example, eliminating travel time and direct expenses. We have also recognized certain business owners and managers prefer video calls over phone calls and in-person meetings as they can save them time as well.

Months into a pandemic, we don’t know when it will end. What we do know, however, is that we’re excited to meet with our clients face-to-face more often—when it’s safe to do so—to continue building those important relationships.

If you’d like to work with the trusted advisors of 415 Group, contact us today

Remote audit procedures can help streamline the audit process and protect the parties from health risks during the COVID-19 crisis. However, seeing people can be essential when it comes to identifying and assessing fraud risks during a financial statement audit. Virtual face-to-face meetings can be the solution.

Asking questions

Auditing standards require auditors to identify and assess the risks of material misstatement due to fraud and to determine overall and specific responses to those risks. Specific areas of inquiry under Clarified Statement on Auditing Standards (AU-C) Section 240, Consideration of Fraud in a Financial Statement Audit include:

In addition, auditors will inquire about management’s communications, if any, to those charged with governance about the management team’s process for identifying and responding to fraud risks, and to employees on its views on appropriate business practices and ethical behavior.

Seeing is believing

Traditionally, auditors require in-person meetings with managers and others to discuss fraud risks. That’s because a large part of uncovering fraud involves picking up on nonverbal cues of dishonesty. In a face-to-face interview, the auditor can, for example, observe signs of stress on the part of the interviewee in responding to the question.

However, during the COVID-19 pandemic, in-person meetings may give rise to safety concerns, especially if either party is an older adult or has underlying medical conditions that increase the risk for severe illness from COVID-19 (or lives with a person who’s at high risk). In-person meetings with face masks also aren’t ideal from an audit perspective, because they can muffle speech and limit the interviewer’s ability to observe facial expressions.

A videoconference can help address both of these issues. Though some people may prefer the simplicity of telephone or audioconferences, the use of up-to-date videoconferencing technology can help retain the visual benefits of in-person interviews. For example, high-definition videoconferencing equipment can allow auditors to detect slight physical changes, such as smirks, eyerolls, wrinkled brows and even beads of sweat. These nonverbal cues may be critical to assessing an interviewee’s honesty and reliability.

Risky business

Evaluating fraud risks is a critical part of your auditor’s responsibilities. You can facilitate this process by anticipating the types of questions your auditor will ask and ensuring your managers and accounting personnel are all familiar with how videoconferencing technology works. Contact us for more information.

© 2020

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