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Audit Preparation: Ensuring Your Organization is Ready for the Process
By: Renee McNutt and Kylie Kalleward
If your organization has never had to undergo an audit before, the process can be daunting and overwhelming. A typical reaction could also be fear—fear that the auditors are only there to find faults and uncover fraud. We get it!
However, the reality is quite different. As auditors, our goal is to support and strengthen your organization. We’re here to help identify areas for improvement, ensure compliance, and provide insights that can enhance your processes and overall performance. We understand your concerns and are committed to working with you to achieve the best outcomes for your organization.
Communication. Communication is key. Anything you can do to discuss, plan, review questions or outstanding items during your audit preparation will help significantly. While the audit is in progress, be as responsive as possible by having your calendar open to be available to the auditors as their questions come up and to gather their testing items quickly. This will help move the process along.
Proactivity. Keeping note of difficult accounts from a prior audit, balancing sheet accounts monthly, or items the auditors wanted extra detail on, and providing those at the start rather than waiting for the request to come in later helps speed up the process.
Have a Planning Meeting. It is a great idea to meet with your audit team before the scheduled audit to agree on expectations, timing, and requested item lists, as well as discuss certain areas of focus. This is also an opportunity to review areas that worked or didn’t work in the prior year’s audit and how audit preparation and the process can be improved.
During this time, it is a great opportunity to ask your auditor for the PBC (provided by the client) list. This serves as your road map for what to gather and what types of documents the auditors will be reviewing. It typically stays the same from year to year, so you can get a jump start on it ahead of time.
Secure File Sharing. Ask the auditor how they want to receive your files, and if you’re not sure how to use the portal they have, ask! Using a portal is much more efficient and secure then transferring documents back and forth.
Does My Organization Need to Start Audit Preparation?
To ensure that you are ready or need to have an audit, here are a few questions to ask:- Do we need an audit?
- Does my organization receive federal grant dollars?
- Do any of my funding sources (government agencies, private foundations, etc.) require financial reporting or an audit?
- Does my Board of Directors or any major contributor wish for an audit?
- Is it in my organization’s best interest to ensure the accuracy and integrity of the financial reporting?
Audit Preparation To-Dos
Communication. Communication is key. Anything you can do to discuss, plan, review questions or outstanding items during your audit preparation will help significantly. While the audit is in progress, be as responsive as possible by having your calendar open to be available to the auditors as their questions come up and to gather their testing items quickly. This will help move the process along.
Proactivity. Keeping note of difficult accounts from a prior audit, balancing sheet accounts monthly, or items the auditors wanted extra detail on, and providing those at the start rather than waiting for the request to come in later helps speed up the process.
Have a Planning Meeting. It is a great idea to meet with your audit team before the scheduled audit to agree on expectations, timing, and requested item lists, as well as discuss certain areas of focus. This is also an opportunity to review areas that worked or didn’t work in the prior year’s audit and how audit preparation and the process can be improved.
During this time, it is a great opportunity to ask your auditor for the PBC (provided by the client) list. This serves as your road map for what to gather and what types of documents the auditors will be reviewing. It typically stays the same from year to year, so you can get a jump start on it ahead of time.
Secure File Sharing. Ask the auditor how they want to receive your files, and if you’re not sure how to use the portal they have, ask! Using a portal is much more efficient and secure then transferring documents back and forth.