How to choose a statutory auditor: 7 questions before appointment

What does a good auditor selection process mean?

A good auditor selection process identifies a firm that can perform a compliant statutory audit and communicate useful risk information to management and those charged with governance. Price matters, but it should not be the only criterion. A weak fit often becomes visible only during year-end pressure.

Seven questions to ask

1. Are you registered with PANA and authorised to perform statutory audits?
2. How will independence be assessed and documented before appointment?
3. What similar clients or industries has the engagement team audited?
4. Who will actually lead fieldwork, review complex areas and communicate with management?
5. What is the timetable from planning to audit report signing?
6. How do you handle difficult accounting estimates, management override and disagreements?
7. What will management receive apart from the audit opinion: status updates, findings, management letter, closing meeting?

Governance and independence

The auditor should not audit their own work, participate in management decisions or create threats that cannot be reduced by safeguards. In larger governance structures, the audit committee should also consider auditor independence, communication with those charged with governance and the proposed audit strategy.

The choice is linked to the quality of the audit process. A strong auditor will challenge significant risks, accounting estimates, opening balances and going concern assessment where relevant.

What does the board evaluate?

The board or supervisory body should evaluate whether the auditor understands the business model, has enough senior involvement and can work within the reporting timetable. For companies planning financing, sale processes or group reporting, the auditor's communication style is just as important as technical competence.