Tips for a “Pain Free” Annual Audit
Here are some suggestions to help your organization navigate its way through a pain free audit, sparing your staff and your audit team unnecessary delays and headaches that could cloud your financial picture, and add costs to the fee set in your audit engagement letter.
- Proactively Communicate & Cooperate with Auditors: While conducting a steady dialogue between the auditing firm and the organization’s management throughout the year – not just at year end, management has the opportunity to ask questions, discuss matters such as change in programs, and get updated with the latest accounting and auditing standards that affect its financial reporting.
- Establish Sound Internal Controls: Internal control provides reasonable assurance regarding the achievement of its objectives. The main objectives are the processes of safeguarding, or making a more efficient use of an asset. Types of internal controls include approvals, reconciliations, reviews of performance, and segregation of duties.
- Set Budget Expectations: perform budget oversight on a timely basis in order to respond to unanticipated changes in costs (both under-and overspending). Be proactive in contacting funding sources when funds are not received based upon the expectations.
- Request from the auditors a list of required documents well in advance. Use this list to prepare for the audit and to make sure your balances are accurate and can be supported before the auditors arrive.
- Keep Track of Restricted Funds Spending: Some funding sources may not cover indirect expenses; therefore it is important to properly document the method of allocating indirect expenditures on programs, fundraising, and management & general.
- Increase Financial Oversight from Your Board: Encourage board members who have sufficient financial skills and training to stay involved and engaged in the oversight of the financials. Require them to approve the budget and oversee adherence to it. Ask the Board to create an audit committee to select the auditors and communicate with them.
A smooth audit will not only save you time and money but will also provide an additional level of comfort to the auditors that the organization is well managed and organized. That comfort can go a long way in an audit.
Contact us today if you need assistance preparing for your financial statement audit.
Madina Traore, Bookkeeper