SME entrepreneur values strong relationship with external auditor

March 7 2022

A strong relationship between SME entrepreneur and the external auditor and experiencing added value with respect to the auditor’s service provision coherently go together. This is the conclusion of a scientific study led by Prof. Dr. Niels van Nieuw Amerongen RA, which was recently published in the Managerial Auditing Journal. Van Nieuw Amerongen speaks of a new paradigm: “The relationship probably is a prerequisite for high performance service delivery”.

The study is part of a broader research project into the role of the auditor in an SME context, which sheds light on both the perspective of the client and the accountant. Van Nieuw Amerongen: “This study provides us with a better understanding of a major component of a recently recognized concept: ‘Auditing-as-a-service’. One of the starting principles of this concept, is that the audit assignment is not a one-sided process in which the auditor collects audit evidence. It involves a collaborative process. It takes two to tango!”

Adding value

As the strength of the relationship increases, so does the added value of the auditor’s service provision, according to the researchers. The relationship is based on personal contact, trust, friendliness and flexibility. The experienced added value is obtained from aspects such as topicality, relevance, industry specialization, content or general expertise. It is therefore beneficial for auditors to invest in the relationship with their audit clients. It helps create a win-win situation. According to Van Nieuw Amerongen, a good relationship is the foundation of a solid partnership. “When the relationship is good, the client experiences added value in an area the client has not directly asked for but which is a positive result nonetheless.”

Improved audit quality

The recently published study could be the beginning of a new view on audit quality improvement. Van Nieuw Amerongen: “The concept ‘Auditing-as-a-service’ already suggests that good collaboration between auditor and client contributes to the quality of the collected audit evidence. On the one hand, this may lead to more audit evidence provided by the client provides or to the client providing the desired and accurate information at the auditor's specific request. On the other hand, the collaboration may lead to more involvement with one another, where client and auditor get to know each other better on a personal level and the auditor gains more knowledge of the client’s organization. Such close collaboration could also lead to greater consulting potential.”

It is known from prior research that the provision of non-audit services can also lead to transfer of knowledge, which, according to the professor, can contribute to an improved risk assessment by the auditor. The statutory audit is a ‘must’, but investing in the relationship ultimately has the potential to lead to better audit quality.

Client perspective

The published study focuses on client perspective. An SME client values a strong relationship with his or her accountant. According to the researcher, a remarkable conclusion from the study is the following: “The study included both voluntary and statutory audit engagements. This shows that the obligation to audit and the experience of added value in the service provision can easily go hand in hand.” 

This study was conducted by:

  • Prof. Dr. Niels van Nieuw Amerongen RA, holder of the chair Kreston Netherlands MKB Accountancy
  • Erdi Coskun MSc., post-master accountancy student at Nyenrode Business University
  • Prof. Dr. Joost van Buuren RA, Professor of Auditing & Assurance at Nyenrode Business University
  • Dr. Hans Duits RA, Assistant Professor at the VU University of Amsterdam.
This study is also an example of the educational impact case by Niels van Nieuw Amerongen. This impact case describes how education (in preparation for writing a master's thesis) and research reinforce each other! For more information about this impact case, go to "Teaching, research & practice".

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