Your organization’s annual audit: Top 6 findings and how to prevent them

By Bonnie Schwieger, CPA

It’s not uncommon for government finance professionals to feel a sense of anxiety about their organization’s annual audit. Preparing for it often requires extra work, and the uncertainty around findings can lead to unease.

But as you look toward your organization’s audit this year, it’s important to know this: an audit finding isn’t the end of the world. It’s also not too late to prevent one.

Here’s what to know about audit findings and what you can do to prevent them.

What is an audit finding?

An audit finding is a deficiency, noncompliance or weakness identified during an audit. Auditing standards require certain findings to be reported in writing. These findings generally relate to gaps or discrepancies in areas such as:

• Financial statement balances
• Grant compliance
• Federal and state compliance
• Internal controls over financial information and compliance requirements

An audit finding may indicate a material weakness, meaning it could be the result of a misstatement, or it could indicate a significant deficiency.

While not desirable, an audit finding does have a silver lining: it helps to shine a light on areas for improvement. It’s an invitation to take a closer look at your policies, staff training, and compliance processes.

If not addressed, however, audit findings can impact grant compliance, credit ratings, and overall financial integrity.

Common audit findings

To help you know what to look for as you prepare for your audit, here are the most common audit findings we come across.

Findings related to single audits…

1. Uniform Guidance (UG) policies and procedures

Any organization that receives federal grant funding must document and implement certain policies and procedures. These written policies must include procurement requirements, cash management procedures, conflicts of interest and equipment management requirements. We often see organizations caught off guard by this requirement and accept federal grant awards without adopting written policies first.

2. Compliance and control findings over federal programs

Federal program compliance and control findings generally result from a lack of understanding of compliance requirements. Because compliance requirements vary depending on the program, staff members closely involved in managing federal grants must understand the various compliance requirements of significant grants.

Controls over federal programs are equally important as monitoring compliance requirements. Controls may include invoice approval, report review or quarterly monitoring procedures. Controls should be developed for key compliance requirements for all significant federal grants.

Findings related to financial matters…

3. Material audit adjustments

Material audit adjustments often result from complex new standards, lack of staff training or lack of trial balance review. A few ways to avoid material audit adjustment findings include:

• Increase communication with department heads
• Understand and discuss any complex new requirements with your auditors
• Complete a trial balance review before and after any adjustments

Findings related to internal controls…

4. Proper segregation of duties

Properly segregating internal controls is essential for achieving a successful audit and reducing risk. Even in small organizations, it may be helpful to review monitoring procedures and implement additional controls. Simple monitoring is an effective way to deter fraud and strengthen controls. Monitoring procedures may include quarterly reviews of bank reconciliations, billing reports or other regularly occurring transactions.

5. Documentation of approvals

Invoice approvals are common policy and statute requirements. Approval procedures should be clearly documented, and requirements should be communicated throughout the organization.

6. Credit card support

Maintaining proper credit card support is an integral internal control. Depending on state or federal requirements, lack of documentation of this control could be a compliance issue.

It’s important to make sure your organization’s credit card policies are updated, communicated with all card holders, and acknowledged. Credit cards, including gas cards, store cards or other types of credit accounts, should be monitored and reviewed regularly to ensure staff members are properly documenting their purchases and using credit accounts for the correct purpose.

In September 2025, I gave a presentation on this topic to the Minnesota Government Finance Officers Association (MNGFOA). During the presentation, I laid out these and other top audit findings, issues related to each, and how to avoid them. Click here to view the slide deck from this presentation.

How to prevent an audit finding

Now that you know the most common audit findings, you know what your auditors will be looking for during your audit. Now is the time to take a close look at these areas to look for things like unusual transactions, missing documentation, compliance gaps, and outdated policy documents.

Start the conversation with your department heads and staff now: What can we do to correct any issues that exist?

Prepare your organization for an uneventful audit

Proactively identifying and addressing issues related to federal and state compliance, single audit, and internal controls can help your organization avoid an audit finding—and reduce the stress of your experience.

If you’re unsure of where to begin, we can offer accounting assistance or answer your compliance questions. We can also help you review your policies and train your staff. To learn more about how we can shed light on audit findings, contact us today.