It’s that time of year again: Your annual financial statement audit. You want it to go as smoothly as possible, but you are not sure what you need to do in order to make it happen. Here are some best practices and helpful tips to improve the efficiency of the audit.
Gather the information your audit team will need
One of the biggest issues we, as auditors, come across when performing our audits are significant client entries provided to us after the start of the audit. In order to kick off the audit right, it is best to have your trial balance closed and sent over to your auditor prior to fieldwork, if possible. We understand that, despite your best efforts, you might not have all the information available to you at the start of the audit and accounts might still need adjustments. If this is the case, alert your auditors at the start of fieldwork and we can record the entries in our system when you provide them.
check off all the items on the “Prepared By Client” List
If your auditors have not already done so, a few weeks prior to the start of the audit, reach out to them asking for the PBC “Prepared By Client” list. This is a listing of the initial items that the auditors will need to start your audit. If you have any questions about the requested items, reach out to your auditors and they can provide clarity. Your auditors, in most cases, should be able to produce the workpaper you provided last year as a reference while you are gathering the requested items. As you are working on the PBC list, this is a great time to verify that all your accounts have been reconciled at year end and agree to your trial balance and workpapers.
Having the majority, if not all, the PBC list items ready for your auditors at the start of the audit greatly increases the efficiency of the audit. As the audit progresses, we will have additional requests and follow-up questions; therefore, the more of the PBC list items you have prepared ahead of time the easier it will be fielding our questions.
alert your audit team about any scheduling conflicts
Another key issue with audits is alerting your auditor of any scheduling conflicts or time blocks you have set aside for your day-to-day job responsibilities. We respect your time and are happy to work around any scheduling conflicts, so the sooner the better to alert us of these times. In addition, it is best to set expectations with regards to the audit timing and turnaround of the financial statements. If you know that key personnel are not available during the scheduled audit week, reach out to the auditor ahead of time and we can discuss timing alternatives if necessary.
establish audit priorities
We realize that fieldwork can be stressful and at times there will be multiple open requests from us on top of your full-time job responsibilities. Don’t hesitate to ask the auditors which questions take priority over others. We can help determine which of our requests makes the most sense to work on first in order to keep the audit on track.
At the end of the day, communication is key. We are here to be a trusted advisor to you and your organization. Please feel free to reach out to us during the year, not just at year end, with any accounting questions you have. We are on the same team and want to help make the audit go as smoothly as possible.
For more information, contact Caitlin Gibbs at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Not-For-Profit Group.