Your Audit is Complete, Now What?

This blog was written and produced by Leiba Weinberger, CPA, Manager at The Bonadio Group. Looking to get in touch with Leiba? Reach out today: lweinberger@bonadio.com.

Your organization’s audit was just completed, and it is now more than a year since the start of the pandemic. Take the time to consider how the changed work environment affected your organization and the audit process, how the audit went, and what you can improve upon based on lessons learned from your audit.

Changed Work Environment and Your Organization

The past year has brought unique challenges. The necessity to transform to a remote work environment, while preparing for your audit, was not the least of them. Some organizations were more equipped to make the transition while others struggled to modify processes and/or establish new ones to keep their organization running smoothly. Some of the processes may not have been ideal, yet were necessary for the continuity of operations at the time of the COVID-19 pandemic closures. Take the time now to review these processes and improve upon them, as necessary.

It is important to consider the needs of the organization and its infrastructure. Consider whether there is a need for additional technology upgrades or if additional equipment is necessary for employees to properly perform their responsibilities effectively and efficiently. Do your employees have a proper workspace and equipment to perform their work at home? Evaluate cybersecurity risks and whether the proper controls are in place. As the world moves more and more to electronic documentation the cyber risks increase and need to be addressed. Passwords should be secure and changed periodically.

Review the policies and procedures established and determine if the existing controls address the current operating climate. Review each of these areas and consider what adjustments can be made. Many changes were made in a state of emergency and emergency procedures were put into place but may not always be ideal.

Lessons learned from transitioning to remote work can and should be used for the benefit of your organization. A well-developed remote working environment can be part of an effective and responsive contingency plan in case of emergencies. It is also reflective of the way the business world is evolving and how businesses may operate going forward. Consider the benefits from a human resources standpoint for allowing employees to work from home if they can do so effectively. This can lead to improved morale amongst employees by providing them the ability to work on a split schedule between the office and home, and the resulting flexibility this provides them. In addition, a business plan that includes a remote work infrastructure opens the available talent pool an organization can draw upon, extending it beyond their own geographic location. Policies may need to be established and expectations communicated on who can work remote, when staff can work remote or when they are required to come into the office. Utilize what you have learned from this experience to the benefit of you, your employees, and your organization.

The Audit

Just as your audit has completed, take stock of how the audit process went this past year, what worked well and what did not. Your evaluation should not be limited to the interactions between your auditors and you but consider, as well, the impact internally. You might want to consider scheduling a post-audit internal debrief meeting.

Topics to discuss in the conversation can include:

• Communication is key: Were internal communications, as well as communications with the auditors, meaningful and effective? Have agendas been set for meetings to keep them focused and on target? Do you feel more frequent or regularly scheduled meetings are necessary? Do you think perhaps the method of communication needs to be changed (in person meetings/virtual meetings/phone conferences/emails/etc.)?
• Timing and readiness: Have you included enough lead time for preparation? Were tasks appropriately assigned/divided amongst your team? Have you designed the timing to comfortably meet filing or other reporting deadlines? Have you built into your regular workflow time to prepare and keep analyses updated on a continuing basis, perhaps as part of your interim closing processes? Do you have a comprehensive, detailed list of analyses that need to be prepared and documentation that must be presented or made available for your auditors?
• Audit adjustments: see more on this in the takeaways section below.
• Staying up to date with changes in accounting standards or other regulatory items: How is your organization staying up to date with the changes? Are there any new accounting standards that are newly effective or soon to be effective? Are there any changes to reporting on your CFR, cost report, governmental information returns (990)?

Think about how you may want to adjust your timeline for the coming year and how you can improve so you are not up against the deadline. Communicate your needs with the auditors. Remember, each year there are different challenges that present themselves, but prior year experience can help with setting the timetable and expectations. Did your staff know what was expected of them and their responsibilities? Did they meet those expectations? Are staffing changes necessary? Evaluate the size and complement of the finance operations to make sure that it meets the needs of the organization as it grows or changes. Are there areas where you feel the staff need additional training? Consider the use of live schedules or checklists to track the status of projects.

Takeaways

Understand the reason for adjustments proposed by your auditors and be proactive. Consider their impact on a going forward basis. If there were any recommendations by your auditors, even if they did not rise to a level of material weakness or significant deficiency consider the benefits of implementing such recommendations. This applies to recommendations surrounding financial operations, business proficiencies or compliance matters. Were there material adjustments during the audit? What changes will you make to avoid the necessity for adjustments in the future? What processes will you add or change? Small balance sheet accounts that have not had activity should be reviewed. Old outstanding checks or other similar items that you said you will review after the audit – now would be the time to look into those items so they are not in the same place next year.

During the year should you have questions, reach out to your audit team. We are happy to hear from you regularly and prefer to help you resolve questions you may have. You do not have to wait for the audit to address your questions and this can alleviate the need for adjustments.

In conclusion, make the most of your past audit experience and the knowledge you gained from it to enhance your organization and your future audits.

The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We therefore make no warranties, expressed or implied, on the services provided hereunder.