When Designing an RFP for Audit Services, Think Good First Impressions and Efficiency

Think of your request for proposal (RFP) for audit services as your initial introduction and handshake. Your goal is to make a good first impression to the prospective audit firm. You want to convey a message that is positive, thoughtful, and efficient. If you can demonstrate that your organization will be the smoothest audit on the planet, the organization will be more likely to attract high quality audit firms to submit a proposal and obtain lower fee estimates.

Audit firms receive RFPs for audit services on a regular basis, and for them it is a quite standardized process. While many nonprofits like to think that an RFP is an opportunity for audit firms to compete for their business, the truth is that it’s largely the other way around. Designing your RFP to highlight how your organization shines will help you gain the audit firm’s attention and motivate them to offer their “best price” for audit services.

Your primary goal must be to make an upfront, strong, and positive first impression. You want each audit firm to believe that this new engagement will be easy to manage, worry free, and low stress. After reading the first page of your RFP, they need to be thinking that we must “work hard to win this engagement.” To accomplish this goal, your opening statement needs to include your reason for requesting audit services, financial and historical mission highlights that show off your strengths, and commitment to transparency and respect for the auditing process.

Do not wait for audit firms to inquire why you are searching for new audit services. Be direct and let them know that you have a rotation cycle, there are extenuating circumstances like relocation, merger or partnership with another nonprofit, or growing operations with new sources of funding. Stress that you are looking for a stable commitment and it is not your intention to change auditors frequently.

Next, briefly highlight your organization’s strengths both from a financial perspective and a commitment to your mission. You could discuss your operating reserves, strong cash position and commitment to surplus budgets and strong financial performance. If there are weaknesses or challenges, be upfront and point them out along with describing mitigating circumstances (the Pandemic) and your plan of attach for the future. Remember to throw in a few mission highlights such as member or donor satisfaction levels, grants successfully completed, research breakthroughs, and other mission accomplishments.

Be sure to include a brief statement about your commitment to transparency and respect for the auditing process. State that you see many benefits from a thorough and transparent audit, and you welcome all insights, observations, and comments.

Your secondary goal is to convey a message that your accounting systems are strong, you will provide information timely and in the correct format and be responsive to inquiries and additional requests. This will let the audit firm know that they will not have to chase you for information, which will have a significant impact on completing an efficient audit. Not only does this show the organization will be easy to work with, it will directly affect the calculation of fee estimates for the audit services.

Planning Tip – Keep the list of prospective audit firms short, with just 5 or 6 firms (too many is counter-productive). Do your homework on the front-end to make sure each firm on the list would be a suitable match related to industry expertise and capacity. Make sure they all have experience with organizations of similar size and operations. Let the prospective firms know the list is short. This will be another positive motivation factor for proposal submissions.

Lastly, keep your RFP short and to the point. Concentrate on creating a good first impression that incentivizes audit firms to want you as a client. Stay away from overly detailed RFPs that require the responding firms to expand a lot of energy to complete a proposal. You will have plenty of time in the back-end interviews to ask probing questions and search for that perfect match.