31 • 1

CHAPTER

31

MANAGING THE AUDIT

RELATIONSHIP IN AN

INTERNATIONAL CONTEXT*

Norman R. Walker Seymour Jones

PricewaterhouseCoopers LLP New York University

CONTENTS

31.1 Introduction 1
31.2 Establishing Expections 2
(a) Scope of Services 3
(i) The Audit 3
(ii) Business Advice 6
(iii) Performance Evaluation 7
(iv) Taxes 8
(b) Communications 8
(i) Participants in the
Communications Process 8
(ii) Content 8
(iii) Form 9
(iv) Frequency 10
(c) Consistency of Service 10
31.3 Assessing the Qualifications of
the Candidates 11
(a) Criteria 11
(i) Experience in Serving
International Companies 11
(ii) Coverage of Company
Locations 12

(iii) Knowledge of the

Company’s Industries 12

(iv) Communications

Capabilities 12

(v) Working with Internal

Auditors 13

(vi) Continuity 13

(vii) Responsiveness and

Quality of Advice and

Recommendations 13

(viii) Plans for Serving the

Company 14

(ix) Chemistry 15

(x) Cost 15

31.4 Establishing the Terms of

Reference or Deliverables 16

(a) Rationale 16

(b) Content 17

31.5 Conclusion 17

31.1 INTRODUCTION. Professional accountants in their role as auditors perform
an indispensable service in the financial reporting process. As independent outside
experts, they audit management’s financial representations and attest to their fairness.
In doing so, they assure investors and other readers of published financial statements
that the information they are using is fairly stated and relatively unbiased. This, in
turn, contributes to the operational and allocational efficiency of the capital forma-
tion process.

*The author acknowledges the assistance of Ryan Hipscher (Deloitte and Touche, LLP) for the revi-
sion of this chapter.