Responding to audit letters is a professional requirement for every law firm. When clients get audited, the auditor confers with the client’s attorneys for feedback on loss contingencies — these include any pending litigation, unasserted claims, and assessments which might materially impact the auditor’s judgement of the company’s financial condition and accounting of loss contingencies.
And while most firms receive audit letters, they vary greatly in how they manage their response efforts. In practice, organizations typically rely on manual processes that are inefficient and create an unwelcome burden for lawyers and staff.
A Modern, Technology-drive Approach to Audit Letter Response
Using the InOutsource solution for audit letter response, risk teams can execute this critical process more efficiently while minimizing the overhead and interruption lawyers experience with legacy, manual methods. This purpose-built software solution integrates key historical information, automates repeatable workflows, and centralizes review and reporting. The end result is that your audit letter responses are delivered to clients faster, and with less burden to your operations team and to your lawyers.
Audit Letter Response:
Centralize, Integrate and Automate this Critical Risk Workflow
Manual Audit Letter Response Management — Inefficient and Risky
When it comes to responding to voluminous client audit letter requests, law firms face tremendous risk, overhead and inconvenience. That pain typically hits many people, including: lawyers, legal assistants, intake and conflicts teams, finance staff, and other operational players.
Every detail must be gathered, reviewed and verified. And because firms have to certify their responses, no stone can be left unturned. So for every client, each matter must be identified and every single practitioner surveyed on whether they have “reasonable knowledge” about material factors.
Collecting and documenting input from every lawyer comprehensively and consistently — and doing so in a timely manner — presents significant challenges.
Even basic supporting analysis, like building lists of which attorneys worked on which matters, typically creates painful burdens for risk and finance staff.
Furthermore, because clients expect outside counsel to address audit letter response as a matter of professional responsibility — seeing little strategic value in this compliance exercise — firms typically cannot fully bill for all attorney and staff time spent.
InOutsource Has the Solution
If your firm is looking for a fresh approach to managing audit letter response, InOutsource has the answer. Using automated workflow, reporting and data integration, we take the pain out of the process.
And with a configurable solution built on the Intapp OnePlace for Risk & Compliance platform, we enable your firm to generate even greater return on your Intapp investment — without having to implement and integrate a dedicated, stand-alone software tool.
Our solution, built on the Intapp risk platform, connects and manages the complete audit response lifecycle:
“We have virtually eliminated paper. Going electronic has saved us so much time. We send an electronic link to the responsible attorney and to the committee and they click on a link and review it that way.”
Risk Compliance Manager
“We received glowing feedback from offices that previously received voluminous PDF packets that were cumbersome to review. InOutsource provided more value than a custom software developer. We get great collaboration and real-time interaction, plus we know the team and enjoy working with them.”
Director of Risk Management
Building on its existing Intapp investment, WilmerHale earned awards and accolades for its internal initiative to automate audit response letter management.
Read a summary of their (Star Wars themed) ILTA conference presentation, highlighting the strategy and steps they took to streamline a painful, inefficient process with software-driven document creation and process workflow management (notifications, reminders, tracking, and reporting).
The firm’s metrics show the new system slashing manual and repetitive work, making the process 36% more efficient. And their efforts were characterized as “magical” and “revolutionary” by partners.
“In my Outside Counsel Guidelines database, fully 31% of the clients say that they will not accept any charges for preparation of audit response letters – even though if one is aware of a contingent liability that meets the test, it may take many hours to settle how to report that so that it can be disclosed properly.
“My experience has been that all too often CPAs tend not to mention law firms’ reports, I assume on the basis that the amounts are not material or too contingent.”
Head of Client and Matter Acceptance Team, Gowling WLG
“Some lawyers may create more potential professional liability over the coming months by drafting a single letter in response to their client’s independent auditor’s request for information than they will throughout the entire rest of the year.
“…[too many firms] have failed to develop and implement appropriate internal policies to insure they handle these auditor’s requests according to the professional standards required of them.
“Best professional practice demands that every attorney or law firm review the ABA-AICPA requirements before responding to Auditor’s Request for Information. Every law firm should implement an internal procedure for responding to auditor’s request for information.“
Managing Member and Head of Professional Liability Section, Seltzer Chadwick Soefje & Ladik, PLLC