Statutory audit for a business is both a boon and a bane, with only the time horizon separating the two. Even the most favourably disposed will consider going through audit a pain as it involves additional work, requires work discipline and demands explanations for all deviations. Even at a later date benefits do not ‘emerge’, for absence of problems related to the audit period is the only gain.
Audit-pain can grow exponentially when two experts have a differing view on a given compliance issue. Often the difference could be between the company secretary who has implemented a given business decision and the statutory auditors who feels otherwise.
These differences can lead to missed timelines, lost business opportunities and additional costs. Pre-empting differences or when differences emerge addressing them at early stages is the most viable way out. In practice this translates to having these four steps in place:
- Scheduled meetings at predefined intervals, say each quarter or half-year, without any specific agenda. This can be a good forum for not only strengthening their personal relationship, but also nipping any issues as they crop up.
- Identifying potentially contentious issues before taking decision and involving the two professionals in the decision making process. Illustrations of such issues can be private placement of shares, capital restructuring, using new borrowing instruments and affecting managerial compensation changes among others
- Once a difference has cropped up, recognize the difference and plan to resolve it. This involves documenting the difference and its implications as a preparatory step to the meeting for resolution.
- Prudence demands that a backup plan be agreed on identifying what will be the planned action should the situation turn unfavourable, which is agreed to between the two professionals.
As in all issues involving interpersonal relationship, while processes help avoid or minimize issues, the perfect solution is in the parties involved taking an objective view and use the cushion of personal goodwill to resolve the difference.