One of the most dreadful times of year is often when the auditors come around to complete the year-end audit fieldwork. They may get in the way, disrupt your daily routine and activities, and constantly ask questions. However, this does not have to be a painful process for you or your staff. There are several things you can do ahead of time to reduce the number of questions from the auditors and the time your organization spends on the overall audit.
It can be extremely frustrating when you get to the end of the year and realize the support does not match the account balance on the trial balance. Implementing procedures such as a monthly reconciliation process can save significant time looking for errors at the end of the year. The time spent up front preparing monthly reconciliations for cash accounts, receivables and payables, prepaids and accruals, and other balance sheet accounts will help to ensure you have an accurate trial balance throughout the year and at year-end. Not only will this be useful when providing support to your audit team, it will also help provide accurate and complete financial information for monthly or quarterly board and finance committee meetings.
Each year you receive the detailed and daunting prepared-by-client (PBC) list from your auditors. This list requests everything from invoices, new or updated agreements, reconciliations, board minutes, and various other items needed to complete the audit in compliance with the everchanging audit requirements. It is mutually beneficial to your organization and your audit team that you utilize electronic documentation and file transfer. Your audit team will set up a secure document hosting site to which all relevant support documents will be uploaded. By using the electronic site, the responsible parties can upload requested information immediately when available and the audit team has direct access to the uploaded information. This has become a very time-saving piece of the audit process; no more waiting until day one of the audit to gather, scan, and assess the audit support provided. Uploading complete and accurate information from the PBC list early allows the audit team to analyze the documents and potentially start the audit ahead of schedule.
Internal controls and documentation of those controls is a major focus of the audit procedures. It is very important to not only have strong controls in place, but also to ensure they are well-documented. Internal controls help the accounting and finance functions run smoothly, properly segregate duties, and detect or mitigate fraud. An area of focus for the year-end audit is reviewing the documented controls and their implementation. As your organization prepares for year-end close, it is a good time to assess the controls you have in place, implement or update controls that may be lacking or weak, and verify they are well-documented. Your audit team will be requesting documentation of internal controls as part of the year-end audit. To reduce questions about the controls, provide the detailed documentation that you have been working hard to update throughout the year.
These are just a few ideas to help simplify your audit process and reduce the time your audit team is on-site. Being prepared and ahead of schedule is a step in the right direction for a timely and smooth audit. Reach out to your team and ask what you can do to ahead of time to help expedite their process and, ultimately, reduce the disruption of your daily tasks.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.