An external Upcoming Audit can assist a company or nonprofit organization in avoiding errors that are both costly and embarrassing. Adequate planning can significantly simplify the auditing process, reduce the number of unexpected findings, and possibly even lower costs.
These important actions may assist simplify and make the most of your subsequent Upcoming Audit:
Maintain a positive attitude
It’s not uncommon for CFOs, finance directors, and controllers to view audit fieldwork as an interruption to their usual routine at the office. When it comes to your audit team, cooperation and planning can lead to a more efficient procedure, which in turn will help you to get back to normal operations.
Audits aren’t supposed to be confrontational in nature. Users of your financial statements, such as lenders and investors, can get the assurance they need regarding the accuracy of your financial reporting with the use of a professional resource known as an external audit team. An Upcoming Audit may also bring novel ideas, guidance in accounting, and potential solutions to improve internal controls and reduce risks.
Before beginning the fieldwork for your next audit, you should get together with your accounting team and discuss the goals and advantages of the audit. It is possible that it is vital to differentiate your audit of your financial statements from an audit conducted by the IRS, which may cause them to be careful and dubious. Being upfront and honest will help put people at ease and reduce their anxieties.
Appoint a point of contact.
Determine who in the accounting department possesses the necessary skills and should serve as the auditor’s primary resource for inquiries and document requests. This will reduce the amount of confusion and duplication of effort that occurs within the accounting department, and it may also reduce the amount of time that external auditors are required to spend on-site.
Create a schedule for events.
It is possible to reduce the amount of time necessary between the beginning of the audit and the receipt of the final report by providing your Upcoming Audit team with a schedule that details the dates that are considered to be the most significant. Everyone would benefit from clear information regarding the time frame. Take into account the following dates:
Preliminary planning time
- Consensus regarding the modifying of the journal entries and the revised trial balance
- A preliminary version of the financial statements will present.
- The final publication in time for the deadlines, the governance meetings, or the requirements of the bank
- Examine this schedule to identify any potential scheduling conflicts that may arise, including but not limited to vacations, holidays, medical leaves of absence, business conferences, and regulatory deadlines.
Before beginning work in the field, each transaction for the year should put into the accounting system, and the year-end balance of each account should support by a timetable. The amounts that are state on these schedules need to be consistent with those seen in the financial statements. Be prepare to explain and give proof supporting any estimations that underlie account balances, such as allowances for uncollectible accounts, warranty reserves, or the percentage of completion for work-in-progress inventories. For example,
In an ideal scenario, a different member of the accounting department should look over the schedules to check for errors, discrepancies, and unanticipated deviations based on the company’s budget, expectations, or the balance from the previous year. During an audit of financial statements, one of the most effective strategies to reduce the number of errors and make necessary adjustments to journal entries is to conduct an internal review.
Gather the necessary information to present to the auditors.
When clients prepare their own Upcoming Audit workpapers to support account balances and transactions, auditors express their gratitude to those clients. As your accounting staff reconciled the account balances to the general ledger, they probably already prepared a good portion of these schedules. Typical examples include the following:
- First and preliminary accounting statements and balance sheets
- Reconciliations of the bank
- Reports on the ageing of accounts receivable
Detailed schedules of prepaid products, expenses already incurred, and costs associated with repairs and maintenance
Examine the document request for the audit from the previous year and collect the work papers that were created by the client (PBC). There is a possibility that the audit team is unaware of some major events that took happened throughout the year. It is possible that there are extra documents that, if presented early on in the process, might be helpful in assisting in the prevention of last-minute questions.
- Major sales contracts
- Brand new leases
- Loan agreements