Industry-specific experience is a prized quality in an external auditor. For manufacturing companies seeking a new audit firm, it might be among the most important factors. A generalist auditor who doesn’t understand accounting for manufacturing processes and inventory costs likely will require more time – and ask more basic questions – to complete the audit.
Manufacturers evaluating external auditors can reference the attributes listed in this checklist and learn why Crowe is trusted by leading manufacturers for financial statement audits.
An experienced external auditor can point to relationships with dozens to hundreds of manufacturing companies. But experience in a specific manufacturing subsector matters as well: Auditors should understand the operational nuances of a plastics manufacturer versus a food producer.
The Crowe advantage: Crowe has audited more than 400 total manufacturing clients.* The team brings extensive experience with a range of manufacturing subsectors: metals, plastics, chemicals, agribusiness, automotive, machinery and industrial equipment, and more. Crowe specialists understand the specific ways to deliver a high-quality audit for manufacturing companies.
Manufacturing audits can be more complex than a typical audit because of how inventory is valued and tested. With minimal orientation, an experienced manufacturing external auditor can dive into price testing, inventory observation, obsolescence costs, capitalized variances, and countless other inventory-specific issues.
The Crowe advantage: When an inventory challenge or question arises during the audit, the Crowe team has likely seen it before. Specialists can troubleshoot issues, identify errors, and clearly talk through questions with management.
An audit might reveal insufficient internal controls or poor inventory management processes. While independent auditors have limitations on providing non-attest services, they can share high-level best practices and insights gleaned from working with other manufacturing clients.
The Crowe advantage: Thanks to their extensive manufacturing experience, Crowe auditors understand what optimal, state-of-the-art inventory management looks like and how technology plays a role in automating processes and reducing errors. They can share successful approaches used by other manufacturing companies.
Price volatility and supply chain problems have roiled manufacturers in recent years. These issues also can complicate an audit. An experienced manufacturing auditor should understand how rapidly changing input costs (freight, raw materials, labor) affect inventory costs and valuation.
The Crowe advantage: Crowe brings business acumen to the audit process. Through its ongoing relationships with manufacturers of all sizes, the Crowe team understands the operational challenges that manufacturers face and how those challenges affect accounting procedures and financial reporting.
When audit complexities arise, skilled external auditors understand which company managers or executives to pull in for discussions or to pursue information from. Their familiarity with manufacturing team roles saves time and frustration.
The Crowe advantage: Team members use judgment based on experience to determine how to involve more senior team members in audit discussions. Crowe clients also benefit from access to senior Crowe personnel who can step in as needed to address manufacturing audit challenges and answer questions – sharing their decades of experience.
When a private equity group acquires a manufacturing company, the transaction affects financial statements and the audit in numerous ways. Manufacturing auditors also should be versed in purchase accounting and valuation.
The Crowe advantage: Crowe audit team members work extensively with private equity groups and perform numerous audits on newly acquired companies.
* Based on current clients as of fiscal year-end March 31, 2023.
