Preparing for an audit and its associated fieldwork can be overwhelming and time-consuming. Below, we’ve outlined helpful tips to help this yearly process go more smoothly.
Here are the 9 keys to a successful audit.
Don’t Wait Until the Last Minute
Treating audit preparation as a year-long process will minimize apprehension and frustration and make the audit process easier. Start by creating an audit plan and setting clear expectations with your team. Then, keep your schedules and reconciliations up-to-date throughout the year to avoid the last-minute scramble of gathering the necessary documentation. Also, don’t wait until the end of the year to discuss new or unusual transactions with the audit team – when it comes to audits, surprises are never good.
Learn from Past Audits
Consider prior year audit adjustments, internal control recommendations, or challenges raised during previous audits and use those items as a starting point for self-review to avoid repeating those issues. During your planning session with the auditors, talk about what went well during last year’s audit as well as where you – and they – think there are opportunities for improvement.
Document, Document, Document
Document all transactions throughout the year, and, for unusual transactions, also keep documentation related to that transaction's decision-making process. Documenting all year prevents you from overlooking essential documents and wasting time searching your records because you don't have what the auditors need.
Perform Monthly or Quarterly Reconciliations
When you conduct monthly or quarterly reconciliations, you can identify, investigate, and resolve reconciling items promptly. Waiting until the end of the year usually means running out of time and into trouble.
Want insight on the kind of reports you should be running? Download our Critical Reporting Cheat Sheet.
Consider Activity Changes
Are there new reporting requirements? Were activities discontinued? Did you implement significant changes in internal control systems? Such changes could trigger accounting and reporting considerations that should be communicated to the auditors during planning. Additionally, new accounting standards could affect your audit, so stay up-to-date on accounting practices because they may require you to manage or track your data differently to meet new standards.
Develop a Timeline and Delegate
Review the list of documentation and schedules requested by the auditors. Assign action items to appropriate team members and include a reasonable due date, leaving adequate time for review and corrections if necessary. Tackle the most difficult, complex, or time-consuming areas first.
Ensure Key Team Members are Available
Avoid scheduling time off during the audit, and consider rescheduling non-critical meetings for staff involved in the audit. The auditors will ask for additional information, including supporting documents and explanations, so you need the right people available to meet their needs. Consider having brief status meetings or obtaining an open-items list from the auditors at logical intervals during the engagement to track progress.
Once the Audit Starts, Relax
You’ve spent a year preparing – you’ve got this.
Keep the lines of communication open with the auditors between fieldwork and the final audit report. If there are open items, establish due dates of when you’ll give the auditors that information. If the auditor is attending meetings with the audit or finance committee or board of directors, confirm the date, time, meeting location, and other pertinent details. Consider holding a post-audit closing meeting with employees to communicate results and solicit feedback.
Harbour Rock’s audit support will ease the burden of financial audits. As your CFO, our job is to work with financial auditors on your behalf. We’ll have insight into your prospects, forecast, and budget – key elements your auditors must understand.
You can count on us to support your efforts in documentation and compliance as well as to minimize the disruption of an audit so your internal team can keep up with their day-to-day responsibilities. Contact us if you’d like more information.