5 Tips for Relieving Audit-Related Headaches (No Ibuprofen Required)
April 8, 2015
For many finance directors, the words “annual audit” often evoke a sense of dread, anxiety and even fear. If they’re uttered repeatedly, individuals who are particularly sensitive may feel their head begin to pound.
Okay, so maybe (hopefully) this is an exaggeration, but the good news is, your annual audit doesn’t have to be deserving of such negative feelings. Audit-related stress typically comes from having to locate and dig up months-old information. And because a great deal can happen during the span of one year, this retrospective task can easily become overwhelming.
But by thinking about the audit throughout the year — and implementing regular audit-prep procedures — the entire process can become less painful for all. So this year, resolve to follow these five audit-prep tips, and prepare to put away the ibuprofen.
1. Add audit preparation steps into monthly or quarterly reconciliations.
An extra hour at the end of each month can easily save you more than 12 hours at the end of the year in audit-prep time. This proactive practice also allows you to present timely and accurate information to your organization’s council or board. It can help your auditor’s fieldwork go more smoothly and quickly, too.
2. Set deadlines for workpapers.
It’s a good idea to establish deadlines for having the information necessary to complete each workpaper — and then stick to these deadlines. If you need accountability for this, set a reminder on your email calendar, or give an estimated audit-prep schedule to someone else within the finance department with instructions to check in every so often. Also, when preparing workpapers, be sure to double-check all formulas to ensure they’re calculating correctly.
3. Stay organized.
Keep all support documents (as deemed reasonable) and notes in a designated physical or electronic audit folder, since auditors will likely ask for these items during the audit. We also recommend keeping a list of items typically requested by the auditor (or referencing last year’s auditor-provided to-do list) so you can have this information ready to go at year-end.
4. Use the time during primary fieldwork wisely.
Here’s an example of what I mean by this: If you added “identifying capital assets” to your month or quarter-end checklist and have questions about which items should be capitalized, bring these to your auditor’s attention right away. (If preliminary fieldwork takes place in December, your auditor can address questions relating to checklists from January through November.)
5. Involve your auditor early on in the process.
Don’t wait until the first day of fieldwork to discuss issues you’ve come across during audit-prep work. Your auditor is only an email or phone call away — and more than happy to help at any time of the year. They can also help you with audit-prep practices, too. For example, we’ve developed personalized month-end checklists and best-practice workpapers in formats that are easy for all to understand. Being able to effectively communicate with your auditor is key!
By incorporating these five tips into your audit-prep efforts, you may find that your auditors ask fewer questions and experience fewer issues during fieldwork. And this, of course, means they’ll spend less time at your office, leaving you with fewer headaches — and with more time to budget and plan for the year ahead.
Andy Berg, CPA, is AEM’s Government/Nonprofit Segment Leader. When he’s not fishing for ways to help governments boost efficiency, he’s casting lines for whopper muskies. You can reach Andy at 952.715.3003 or at email@example.com.