Audit Firm RFP: Template and Questions to Ask

Running a competitive request for proposal (RFP) process is one of the most effective tools a CFO has for controlling audit costs, improving service quality, and ensuring the right firm is aligned to the company's complexity. Yet many finance leaders either skip the process entirely — relying on an incumbent relationship for years without competitive review — or run a superficial process that produces little useful information.

A well-designed audit firm RFP does three things: it generates fee competition that benefits your company, it surfaces meaningful differences in firm capabilities and approach, and it satisfies the governance expectations of your board and audit committee. This guide provides a complete RFP structure, the questions that reveal the most about firm quality, and a weighted scoring framework you can use to evaluate responses.

Why a Formal RFP Process Matters

The audit market is more competitive than most CFOs realize. Audit firms — particularly at the regional and national mid-tier level — compete actively for mid-market mandates, and pricing is not fixed. The only way to access that competition is to run a structured process that invites multiple qualified firms to bid simultaneously.

Competitive pricing. Studies of mid-market audit RFPs consistently show fee reductions of 20–35% when a company runs a competitive process versus simply accepting an incumbent's renewal quote. Even companies that ultimately stay with their current firm benefit: the incumbent knows their pricing has been tested against the market.

Scope alignment. An RFP forces both parties to clearly articulate what the engagement covers. Many long-standing audit relationships accumulate scope ambiguity over time — work that was once explicitly agreed to is now assumed, and neither party has revisited whether it's still necessary or appropriately priced. The RFP process resets this.

Discovery of service quality differences. Written proposals and structured presentations reveal significant variation in how firms approach your industry, staff their engagements, and deploy technology. These differences are often invisible in an incumbent relationship where the firm has learned to manage your expectations. A side-by-side comparison makes them visible.

Board and audit committee governance. Best practice governance calls for periodic competitive review of the external auditor, even when there is no intent to change firms. Many audit committees expect this as part of their oversight responsibilities, and the process demonstrates to the board that management is exercising financial discipline over a significant line item.

Who to Include in Your RFP

Selecting which firms to invite is itself a consequential decision. Too few firms and you don't generate meaningful competition. Too many and you create an administrative burden that produces lower-quality responses from firms who view the process as low-probability.

Three to five firms is the optimal range for most mid-market companies. This is enough to generate real price competition and meaningful differentiation, while keeping the process manageable. For very large or complex audits, five to seven firms may be appropriate.

When building your shortlist, consider the following criteria:

• Tier appropriateness: Match the firm tier to your company's stage and capital markets expectations. A $75M private company inviting only Big 4 firms will get expensive proposals. Including regional mid-tier firms broadens the competitive range.
• Industry expertise: Prioritize firms with demonstrated experience in your sector. A manufacturing company should include firms with active manufacturing practices. Industry knowledge affects both audit quality and efficiency — firms that already understand your accounting complexities take fewer hours to complete fieldwork.
• Geographic fit: The engagement team should have proximity to your primary operations. Remote audit capabilities have expanded, but relationship management and on-site presence still matter, particularly for year-end fieldwork.
• Size fit: Avoid firms where you would be among their largest or smallest clients. You want to be meaningful enough to receive good partner attention, but not so large that you stretch the firm's capacity.
• PCAOB registration: If your company is publicly traded, contemplating an IPO, or has SEC reporting obligations, the firm must be PCAOB-registered. This requirement eliminates many boutique and smaller regional firms from consideration.

Start with a longer list of candidates — perhaps eight to ten — then screen to your final three to five based on a quick qualification check: do they have clients in your industry, do they have offices in your geography, are they the right tier for your size?

RFP Template Structure

A well-structured audit firm RFP has six sections. The goal is to give every firm the same information and ask for responses in a consistent format that makes side-by-side evaluation straightforward.

30 Questions to Ask Audit Firms

The questions you ask in an RFP — and in oral presentations — determine how much useful information you actually receive. Generic questions yield generic answers. The questions below are specific enough to produce responses that differentiate firms meaningfully.

About the Engagement Team

1. Who will serve as engagement partner, and how many years have they been a partner at this firm? How many active audit engagements do they currently manage?
2. What is the expected ratio of partner hours to total engagement hours? How many hours will the partner personally spend on our engagement?
3. Who will serve as engagement manager and senior associate? Please provide brief bios and relevant experience for each.
4. What is your firm's policy on staff rotation? How frequently do you rotate the engagement manager and senior staff on a typical mid-market engagement?
5. If the engagement partner leaves the firm or transitions off our account, what is the succession process? How is knowledge transferred?
6. How do you handle staffing shortfalls during peak season? Do you use contractors or staff from other offices, and how is quality maintained?
7. Will any work be performed by offshore or shared services teams? If so, what percentage of hours, and how is that work reviewed?
8. How do you onboard a new client? What does the first-year planning process look like, and how do you manage the inherent inefficiencies of a transition year?

About Industry Expertise

1. How many clients in our specific industry does your office (or the proposed engagement team) currently serve? What is the revenue range of those clients?
2. Can you describe a recent engagement where you addressed a complex accounting issue specific to our industry — for example, [revenue recognition under ASC 606, lease accounting, or another complexity relevant to your business]?
3. Has your firm published technical guidance, industry alerts, or accounting memos related to our sector in the past twelve months? If so, please provide examples.
4. Are any of your current clients willing to serve as references for their experience with your firm's industry knowledge specifically?
5. What accounting standard changes are most likely to affect companies in our industry over the next two to three years, and how does your firm prepare clients for those transitions?
6. Does your firm have a dedicated industry practice group for our sector? Is the proposed engagement team a member of that practice?

About Technology and Process

1. What audit management software does your firm use? Is it proprietary or third-party (e.g., CaseWare, TeamMate, or an in-house platform)?
2. Describe your firm's use of data analytics in the audit process. What specific analytical procedures do you perform that go beyond traditional sampling approaches?
3. What client portal or collaboration platform do you use for document exchange and PBC list management? Can you describe the client experience?
4. What are your remote audit capabilities? What percentage of fieldwork can realistically be completed off-site, and what are the limitations?
5. How does your firm use technology to test journal entries, identify unusual transactions, or assess fraud risk indicators?
6. Describe how your firm stays current on emerging technology in audit — AI-assisted procedures, continuous monitoring, or other innovations — and whether those capabilities are deployed on engagements of our size.

About Fees and Scope

1. Is the proposed fee fixed, or is it an estimate? Under what circumstances would you issue a change order for additional fees beyond the proposed amount?
2. What are the most common drivers of budget overruns on engagements like ours? What assumptions are baked into your fee estimate?
3. Are you willing to commit to a multi-year fee structure — for example, a two-year fixed fee with a capped annual increase in year three?
4. What are your standard hourly rates by staff level for out-of-scope work? Do those rates change in peak season?
5. How do you handle client-caused delays — for example, if PBC items are delivered late or require rework? Are those hours billed as additional scope?
6. If we run a competitive process again in three years, are you willing to re-compete on price, or do you expect fee lock-in as a condition of the current engagement?

About Quality and Independence

1. Has your firm been subject to a PCAOB inspection? If so, when was the most recent inspection, and what deficiencies, if any, were identified in audit engagements?
2. Describe your firm's internal quality review process for engagements. Who performs the engagement quality control review (EQCR), and at what stage of the engagement?
3. What is your independence confirmation process? How do you screen for potential independence violations before accepting an engagement, and how do you monitor throughout the year?
4. Has your firm — or any member of the proposed engagement team — been subject to disciplinary proceedings, SEC enforcement actions, or AICPA ethics investigations in the past five years?
5. If we also engage your firm for non-audit services (tax, advisory, or other), how do you manage the independence and objectivity requirements under auditor independence rules?
6. Describe a situation where your firm identified a material misstatement or internal control deficiency that the client's management had not previously identified. How was it communicated and resolved?

Scoring Framework

Evaluating proposals objectively requires a structured scoring approach. A weighted scorecard prevents the common failure mode of selecting on price alone and ensures that softer but consequential factors — team quality, industry knowledge, communication — receive appropriate weight.

Score each criterion on a 1–5 scale, multiply by the weight, and sum for a total score out of 5. Have at least two evaluators score independently before comparing, and resolve significant discrepancies through discussion rather than averaging. Involve your audit committee chair in the final evaluation.

Evaluating Proposals: What to Look For

Once proposals arrive, the quality of the written submission itself tells you something useful about the firm. A proposal that is clearly customized to your business — referencing your specific industry, your disclosed accounting complexities, your fiscal year end — demonstrates that the firm read your RFP carefully and invested real time in responding. A boilerplate proposal with your name dropped in signals the opposite.

Specificity of team bios. Strong proposals include detailed bios for the proposed engagement partner and manager, with specific clients mentioned (where permitted) or at least described by size and industry. Vague bios ("our professionals have extensive industry experience") are not useful. Press for specifics in the oral presentation if the proposal is thin here.

Realistic fee estimates. A fee estimate that seems unusually low relative to competitors warrants scrutiny. Ask directly: what assumptions are embedded in this fee, and what would cause a scope change order? Some firms quote aggressively in the RFP and recover margin through change orders. Multi-year pricing commitments are a useful signal of confidence in the estimate.

References offered proactively. Strong firms include references in their proposal — current clients in your industry who are willing to be contacted. Treat this as both a substantive data point and a measure of confidence. Firms that offer references proactively are more likely to have clients who will speak positively about them.

Clarity on offshore or shared services work. If any portion of the audit will be performed by offshore staff, this should be clearly disclosed in the proposal. It is not inherently disqualifying, but you need to understand the quality control processes that govern that work.

Reference Check Questions

Reference checks are one of the most underused tools in the audit firm selection process. Most RFPs ask for references; most evaluators make a perfunctory call and ask generic questions. The following questions generate more useful information:

1. How accessible is the engagement partner? Do you have the partner's direct contact information, and does the partner respond personally when you reach out?
2. Has the firm ever delivered the audit late relative to the agreed timeline? If so, what was the cause, and how did they communicate it?
3. Have you received any surprise change orders or out-of-scope billings? If so, were they well-justified?
4. How does the firm communicate identified issues — control deficiencies, audit adjustments, or technical accounting matters? Do they communicate in writing, or is it primarily verbal?
5. Has the engagement team turned over significantly since you engaged the firm? How did the firm manage knowledge transfer during any transitions?
6. If you encountered a difficult accounting issue or disagreement with the firm's position, how did they handle it? Did you feel heard?
7. Knowing what you know now, would you select this firm again? Why or why not?
8. Is there anything about working with this firm that surprised you — positively or negatively — that wasn't apparent during the selection process?

Transition Planning After Selection

Once you have selected a new firm, the transition process requires careful management. Poorly handled transitions cause disruption, damage relationships with both the outgoing and incoming firm, and create risk of delays in audit delivery.

Communicating with the incumbent. Notify your outgoing auditor promptly and professionally after the board or audit committee has approved the selection. Do not notify them before the decision is final. The notification should come from the CFO or audit committee chair, be delivered directly (not through a form letter), and acknowledge the firm's service. You will need the outgoing firm's cooperation in the transition, so maintaining a constructive relationship matters.

AICPA professional standards for auditor transitions. Under AU-C Section 210, the incoming auditor is required to communicate with the predecessor auditor before accepting an engagement. This predecessor-successor communication is a professional standard, not optional. The incoming firm will ask for permission to contact your outgoing auditor — you should consent. The communication covers matters that might bear on the acceptance decision: prior-year audit issues, any disagreements with management, the reason for the change.

Predecessor-successor communication. The outgoing firm is required to respond promptly to the incoming firm's inquiries. In most transitions, this is a straightforward process. In cases where there were unresolved disagreements with management or audit issues, the predecessor may provide a limited response, which the incoming firm will factor into their risk assessment and engagement planning.

Beginning balance procedures. The incoming firm must obtain audit evidence for beginning balance sheet amounts — balances that were audited by the predecessor. This typically involves reviewing the predecessor's prior-year audit report, requesting access to key prior-year workpapers (which the predecessor may share at their discretion), and performing additional procedures on high-risk opening balances. This work is reflected in the typically higher first-year fee and hour estimate for a new auditor relationship.

Allow at least six weeks between firm selection and the start of formal engagement planning. The incoming firm will need time to complete their independence check, internal engagement acceptance procedures, and predecessor communication before they can formally begin work.

Key Takeaways

• A formal RFP process generates competitive pricing, surfaces service quality differences, and satisfies board governance expectations — even if you ultimately stay with the incumbent.
• Invite three to five firms, matched by tier, industry expertise, geographic fit, and size appropriateness.
• Use a structured six-section RFP and require consistent response formats for meaningful side-by-side comparison.
• Ask specific, probing questions about the engagement team, industry knowledge, technology, fees, and quality controls — not generic questions that produce generic answers.
• Score proposals using a weighted framework; do not select on price alone. Firms that underbid year 1 frequently recover margin through change orders in subsequent years.
• Conduct thorough reference checks with current clients of finalist firms, using specific questions about accessibility, billing transparency, and team continuity.
• Allow adequate time for the predecessor-successor transition process, including AICPA-required communications and beginning balance audit procedures.