- Technical knowledge and expertise
- Proactivity
- Coordination of services
- Engagement team characteristics
- Fees and cost control
- Communication
As already mentioned, the last performance measure, communication, is probably
most important.
31.3 ASSESSING THE QUALIFICATIONS OF THE CANDIDATES. There are numer-
ous criteria that can be used to assess the qualifications of the firms being considered
for selection as auditors. Some of the criteria may be assessed fairly objectively and
it is likely that different companies assessing the same firm of auditors would make
a similar assessment. In other cases, the assessments are very subjective and differ-
ent companies might make very different assessments of the same firm. A company’s
assessment of a particular firm may differ substantially based on the engagement
team proposed by that firm.
It is almost always useful to adopt a relatively straightforward quantitative frame-
work for assessing a firm’s qualifications. Such a framework might entail rating each
of the criteria for each of the firms on a scale of, say, 1 to 5 or 1 to 10. A further step
would be to group the criteria into those that are most important, of moderate impor-
tance, or of lesser importance, and assign a rating of 1, 2, or 3 to the criteria within
those groups, respectively. As useful as the quantitative framework may be in focus-
ing the assessment of the firms, it must be recognized that the final decision may
come down to a subjective choice between the top competitors. That choice may not
be the firm with the best quantitative score.
(a) Criteria. The criteria discussed in the following paragraphs form the basis for
the selection of auditors by international companies. The criteria are not necessarily
presented in the order of their importance, as that is a relative judgment and, in all
likelihood, will differ from company to company. However, in virtually every case,
each of these criteria should be taken into consideration as well as others that indi-
vidual companies may identify.
(i) Experience in Serving International Companies. Experience in serving similarly
configured international companies is invaluable to auditors in providing high qual-
ity service to a new international company client. This is important both for the of-
fices serving the parent company as well as for offices serving subsidiaries or other
major operating units, or in the vernacular of audit firms, both the office sending in-
structions and the office receiving instructions.
Further, the partners and managers assigned to the engagement teams at both the
parent company level and the subsidiary level should have verifiable experience serv-
ing international companies in their particular industries. While it may not be the
most important factor, it is, nonetheless, very desirable for the engagement team to
have experience both as a team sending instructions as well as a team receiving in-
structions. Such experience clearly benefits effective communications and the antic-
ipation of potential problems in carrying out their respective assignments.
31.3 ASSESSING THE QUALIFICATIONS OF THE CANDIDATES 31 • 11