Whether federal and/or local regulations require it or a bank, granting agency, or a significant donor, an audit can be a sizeable endeavor not to mention a large distraction from running your organization. With June 30 quickly approaching (for our fiscal year-ends), we wanted to put together a quick checklist of items for you to consider that should facilitate a smooth and efficient audit process:
- Hold a planning meeting
If you have not done so already, we highly recommend holding a planning meeting with your auditors. This meeting should include an update on business operations, any new agreements entered into or modifications to existing agreements (financing, leasing, grant, etc.), and any updates or changes to existing internal control procedures.
This meeting should also include a discussion on the timing of the audit such as inventory counts, fieldwork dates, draft financial statements, and presentations to those charged with governance. Based on the results of the aforementioned topics, the amount of time dedicated to the completion of the audit procedures could be significantly affected and, ultimately, the issuance of financial statements. So, as you can see, having these discussions earlier in the process will be more beneficial.
Now that the timing of the audit has been established, a plan should be put in place to ensure all key account balances are reconciled and tied to their respective subledgers or other supporting documentation. This is where a tool such as a closing checklist will come in hand to ensure roles and responsibilities have been established (i.e. who is preparing the reconciliation, who is reviewing information, and when it should be completed) and no account balances have been overlooked.
- Get organized
The next item to consider is taking the time leading up to fieldwork to get organized. Make sure all invoices have been compiled in an organized fashion (by vendor, by general ledger account, by month, or all of the above), fully executed agreements have been gathered, and monthly statements have been assembled. We will request a sample of these files to test as part of the audit. These will be communicated ahead of time but it will save time and effort tracking down these items if they have been gathered beforehand.
- Be available
Lastly, ensure personnel that play a key role in the recording, authorizing, reconciling, and/or reporting of transactions are available at the time of the agreed-upon fieldwork dates. We will most likely have follow-up questions or requests so it will be important these individuals are available to prevent any delays.
Hold regular updates with both your internal accounting/operations team and also your external auditors. Be realistic about status of requests, open items, and any adjustments to the timeline. Having frequent and comprehensive communication throughout the audit process, through report issuance, is essential for all parties to stay on track.
Please contact us if you have questions about the information outlined above, our seasoned and experienced nonprofit professionals are here to help. You can also learn more about our Nonprofit services by visiting our website.