Auditor Selection Process

Selecting an audit company is a complex and important task. This article aims to help you through the process and provide further insight into the auditing profession.

Recent legislative changes have increased the accountability of management for the accuracy of financial statements (see the notes to this material), which also serve as the basis for tax reporting preparation. Accountability has also intensified in external markets. If the financial statements of a Ukrainian business form the basis for managerial decision-making, management must define the criteria for selecting an audit company for long-term engagement, considering the prospects outlined in the business plan or strategic development programme.

In our opinion, the most important factor in selecting an auditor is the professional competence of the audit company and its staff. Therefore, it is essential to assess this criterion during the selection process. As the matter is rather complex, we set out below the key indicators of professionalism for a modern audit company.

Professionalism of an audit company includes the following components:

• Qualifications and experience of personnel, confirmed by national and international certifications (such as ACCA and CPA), inclusion in the Register of Auditors, and a system of continuous learning and professional development, as well as substantial experience in delivering high-quality audit services.
• Professional experience, demonstrated through practical audits in the industries relevant to client’s operations, understanding of the client’s specific business requirements and the ability to apply standards, exercise professional judgement and adhere to high ethical standards.
• Quality of service delivery, ensured by compliance with the international and national standards for auditing financial statements, the use of modern methodologies and software tools and the adoption of innovative technologies. The presence of an internal quality control system, established within the audit company by a dedicated team of internal reviewers who are independent of audit engagements, is a mandatory selection criterion.
• Market reputation, built on recognition and respect from both the clients and the professional community; a positive public image; an absence of regulatory restrictions or claims; the successful completion of quality inspections by the Audit Public Oversight Board of Ukraine (APOB), the Audit Chamber of Ukraine (AchU) or other legally authorised bodies.
• Strong team of specialists, including auditors, legal experts, tax consultants, IT audit specialists, and property valuers, who are all capable of providing comprehensive business support.
• Client orientation, reflected in the ability to present audit results to the supervisory boards or shareholders, communicate in a business-oriented manner, provide advice on improving business transparency and prioritise long-term client relationships.
• Reliability and service assurance, including the ability to replace individual team members or the entire team promptly and seamlessly with equally qualified professionals in case of emergencies.
• Effective information security system and innovation, as demonstrated by the use of modern IT solutions to protect and store data provided to the auditor, as well as clear evidence of a robust security framework for data transmission and processing.
• Participation in international networks, relevant for global companies or Ukrainian entities whose shares are traded on foreign markets and those with foreign holding structures that consolidate the financial statements, as well as those planning to enter the external markets.
• Transparent pricing policy, where the company maintains a culture of providing detailed cost estimates for upcoming work, broken down by stage, participant and estimated timeframe. This approach enables a fair assessment of service costs and helps to avoid overpayments or suspiciously low pricing that might not cover the company’s expenses or encourage high-quality performance.

Therefore, successfully selecting an audit company largely depends on thoroughly analysing its compliance with the key professionalism criteria outlined above. While certain brands may reliably meet a company’s expectations due to their long-standing presence in the market and stable reputation, a well-considered approach to auditor selection — taking into account all the aforementioned aspects — enables the formation of a shortlist of trustworthy candidates and supports a well-founded decision. It allows you to confidently say: “This is our auditor!”.

Minimum indicators of auditor suitability

Remember that selecting the wrong auditor can result in more than just the failure to detect formal errors in financial reporting; it can also lead to reputational risks or even regulatory sanctions. Use the following checklist to quickly eliminate unsuitable candidates and mitigate these risks:

❌ Absence from the official Register of Auditors or having undergone quality inspections with reservations.
❌ Lack of specialists with experience in your industry.
❌ Failure to use modern data analysis technologies.
❌ Lack of experience in auditing non-financial reporting (if required).
❌ Presence of questionable companies in the client portfolio or a negative reputation.

Auditor selection is a strategic decision, not a formality

Today, auditing is not merely a verification of financial statements to meet legal requirements. It is a tool for managing risks, enhancing investment attractiveness, and strengthening reputation. A properly selected auditor is not simply an external controller, but also a trusted advisor who can help to avoid risks, optimise business processes and reinforce investor confidence.

When is the best time to order an audit?

The peak audit season (January–May) is traditionally the busiest period for audit companies. However, actual auditor availability depends largely on the composition of their client portfolio and the specific needs of those clients. Once budget approvals have been finalised (October–November), every hour of trained and qualified professionals is usually allocated under signed engagement contracts.

It is important to note that only properly trained specialists are permitted to conduct audits. Accepting new engagements after budget approval or during the peak season often means that auditors have to work overtime or during weekends, or postpone work for existing clients. This inevitably affects the cost of services, as overtime work is billed at a higher rate.

Therefore, we recommend preparing for collaboration with an auditor in advance. Specifically:

• Engage an audit company in early autumn, when it is still finalising their client portfolio based on capacity and available specialists. This increases the likelihood of selecting a qualified audit team and enables competitive pricing through tendering. It also ensures personalised attention and flexibility in resource planning, as well as the timely inclusion of audit costs in the company’s budget.
• Plan an interim audit of the nine-month financial report to allow for the identification and correction of errors before the end of the financial year. This helps to ensure that the final financial statements are free from significant deficiencies and avoids last-minute pressure during year-end reporting.

What are the key legislative changes?

Auditors are required to comply with the legislation, including the latest amendments to the Law of Ukraine “On audit of financial statements and auditing”. Notably, company executives are now held much more accountable for the accuracy of financial reporting.

In 2024, a series of amendments were introduced to this law to improve regulatory and oversight procedures in the audit sector. The most substantial updates were enacted through Law No. 3603-IX, which brought the procedures for the adoption, appeal and enforcement of administrative acts into line with the provisions of the Law of Ukraine “On Administrative Procedure”. Additionally, the requirements for leadership positions within the Quality Assurance Inspectorate were clarified. For entities of public interest, the maximum term of cooperation with a single auditor was extended to 10 or even 14 years under certain conditions. The definitions of disciplinary offences were updated, and the procedures for holding auditors accountable were specified.

A separate set of changes relates to the digitisation of processes and the specifics of operations during martial law. From 1 January 2024, all communication with the Inspectorate and submission of information to the Register of Auditors must be conducted exclusively via the electronic cabinet. Clear deadlines have been set for updating data in the Register, and failure to comply may result in the suspension of activities. Reporting deadlines after the end of martial law have been regulated and provisions on certification and quality control have been reinstated; however, some wartime simplifications will remain valid until the end of 2025. These changes enhance transparency in the audit services market, unify procedures and prepare the system for a full return to standard operations after the war.

Non-financial (ESG) reporting includes data on a company’s environmental impact, social responsibility, and corporate governance. For companies working with international partners, auditing of ESG indicators is becoming a prerequisite for attracting investment and cooperating with donors.

Frequently Asked Questions (FAQ)

• When is the best time to order an audit?

The best time to engage an audit company is September–October, before the peak season (January–May), when audit companies are still building their client portfolios.

• What certifications should an auditor have?

ACCA and CPA certifications, inclusion in the Register of Auditors of Ukraine, and participation in a system of continuous professional education and qualification enhancement.

• How can I verify if an auditor is listed in the Register?

This can be done via the electronic cabinet of the Quality Assurance Inspectorate or on the website of the Register of Auditors of Ukraine.

• Is non-financial reporting audit mandatory?

For companies that cooperate with international partners or donors, an ESG reporting audit is a mandatory element of transparency and investment attractiveness.

• What are the risks of choosing an unreliable auditor?

Key risks include reputational damage, fines, regulatory sanctions, reporting errors and loss of investor trust.

• What is the role of an audit company in strategic business development?

An auditor is a trusted advisor who helps optimise business processes, reduce risks and enhance corporate transparency.

Conclusions

The process of carefully selecting an auditor requires the client to demonstrate legal awareness and analyse the professional competencies of the audit company, paying particular attention to its reputation and technological capabilities. Adhering to a clear set of mandatory requirements, verifying compliance with official standards and preparing for the audit in advance ensures adherence to legal requirements and enables the engagement of a reliable, professional and strategic partner, capable of strengthening the company’s stability and future growth.
 
BDO in Ukraine views its clients as strategic partners and is committed to long-term, mutually beneficial cooperation. We deliver high-quality, intelligent audit services by combining the professionalism of our team with the extensive international experience of the BDO network and a deep understanding of the Ukrainian market. We also use cutting-edge, innovative technologies to help your business remain transparent, trustworthy and resilient. Contact us today and we will help you plan an audit at a convenient time that maximises the benefits for your company.