We continue to look into general organizational issues related to ordering of auditing services. Previously, we considered the subject of the audit relevance for company’s owners both from the perspective of problems which can be identified by the auditor as well as from the point of view of development opportunities which will be accessible to business managers and owners after ordering of auditing services.


Separately, we’ve also considered the issue of the auditor’s conclusion (report) format and structure as well as criteria which can be used to define whether this conclusion really depicts the work conducted by the auditor and whether it corresponds to quality requirements and expectations defined before the audit.  


Even if a person ordering the auditing services has a proper understanding of these services and concrete decision to benefit from them, he/she still faces a logical but uneasy question: how to choose an auditor? Are there any concrete algorithm, or at least criteria, based on which the decision on hiring the relevant professional can be taken?


We rush to inform you that there is no such algorithm which can provide you with absolute confidence in the competence, compliance, and trustworthiness of particular auditors, as criteria which are sufficient for one customer can be insufficient for others. Though, there are some general rules which allow to assess the competence of a particular auditing services provider. We’ll dwell on them in this article.  

  1. An auditor must be certified by the Accounting Chamber

The sectoral Law stipulates that auditing services can be provided only by specialists who were certified by the Accounting Chamber of Ukraine. This institution has the register of such individuals and companies.   


The state has established requirements to auditors and accounting firms. Only the adherence to the aforementioned requirements allows them to be included in the register. At the same time, the Accounting Chamber scrupulously supervises the observance of rules of certification of auditors and formal responsibility of accounting firms. Thus, the fact of the presence of a particular certified auditor or firm in the register is one of the first attributes to be considered during the verification of their competence. The Accounting Chamber conducts a routine review of auditors performance, and in case of violations of rules (when an auditor or accounting firm poorly perform their work) issues a warning or strips of the right to provide auditing services. For example, if the aforementioned sanctions were applied to the same firm two years in a row, it can’t be considered as one with a good reputation.


  1. An international certificate is an additional marker of competence

Besides the national certification, an international certificate can serve an additional confirmation of the auditor’s professional competence. CAP/CIPA diploma issued upon the completion of professional accounting courses, as well as diploma on management accounting issued by the Chartered Institute of Management Accountants (CIMA) are vivid examples such documents. Diplomas of the Association of Certified Accountants (ACCA), confirming the auditor’s competence in the compilation of reports in accordance with DipIFR standards, remain above the competition.


The validity of the aforementioned certificates can be verified at the official websites of these organizations. These diplomas are highly valued in Europe and other countries where the developers of the aforementioned advanced courses gained a strong reputation. These programs ensure a more in-depth and practical learning process in comparison with the courses provided by the Accounting Chamber.

  1. The reputation of the auditor is important

In case you’ve just started to consider potential providers of the auditing services, their rating and reputation among clients are crucial for you. In order to answer this question, we advise you to visit the company’s website and its social media accounts as well as those of their key employees. One of the obligatory things which should be published there is successful business cases. Also, it’s worth liaising with at least one of clients mentioned on the website. According to our opinion, the last measure is the most effective one in terms of receiving information on the quality of performance of auditing tasks indicated in the agreement on services provision.

  1. Personal communication will demonstrate the competence of a potential auditor in your business sphere.

If you completed the aforementioned steps, the next one will be the direct communication with the representative of the accounting firm or an auditor. As the result of this communication you have to make sure of the following:

  • the services provider has general theoretical and practical knowledge of audit and accounting – an auditor should be competent in international auditing standards as well as in national and international accounting standards. Though, the last requirement is obligatory only if your company is obliged by the Law of Ukraine “On Accounting and Financial Reporting” to submit reports in accordance with international standards of financial reporting;

  • the services provider has actual experience and practical knowledge in your business sphere. You have the full right to ask questions which will help you understand whether an auditor understands the nature of your business as well as whether he/she has already conducted the audit of companies operating in your domain.

  1. The auditor’s competence can be verified through the test on adherence to general ethical norms

This is a very subjective and vague set of requirements, which, nevertheless can’t be omitted. All non-commercial organizations engaged in monitoring of auditors’ and accounting firms’ activities claim that they have to meet a number of professional and individual criteria stipulated by the relevant codes. Though, these requirements are quite general. Furthermore, if to consider the relations of an auditor and a client, it becomes obvious that before the audit, the question of adherence to them can be answered only by the service provider. At the same time, you, as a customer, have no other choice than to give these answers the benefit of doubt and then verify in practice (during the audit and upon its results) whether the specialist meets the aforementioned requirements or not.


Both professional and individual requirements to auditors are laid out in the abovementioned Law of Ukraine “On Accounting and Financial Reporting”.


The requirements to the professional and personal behavior of auditors during the performance of auditing duties are stipulated by the Code of Ethics for Professional Accountants of the International Federation of Accountants. For instance, this Code sets requirements on objectivity, confidentiality, professional reputation, compliance of auditors, etc.  


The key criteria for assessing the effectiveness of the audit are available in the International Standards on Quality Control, Audit, Review, Other Assurances, and Related Services.  


Thus, when selecting an auditor (accounting firm) you have to focus on formal attributes authorizing a particular person or entity to provide such type of services as well as its professional reputation and competence (through the analysis of the website, feedback from current customers and comments about the service provider on the Internet), depth of knowledge in your particular sphere of business as well as general impression on its adequacy and competence.  Of course, such analysis requires time and is very often difficult to conduct. Though, you have to bear these expenses, as the accuracy of the auditor selection will influence the credibility of its conclusion for potential partners and creditors.