Depending on the company, audits can bring harsh realities or be walks in the park. It is important that the heads of departments model the right attitude so others will follow. The more employees cooperate with auditors, the quicker and more efficient the experience. In all circumstances patience goes a long way.
Information Request List
Some auditors prefer electronic documents, and others prefer paper. Requests by the auditor should be noted and accommodated prior to their arrival. If any requests cannot be met, organizations should inform the auditors so that an acceptable alternative can be agreed upon.
Create a Binder for the Audit
Preparing information that the auditors will need is a great way to begin an audit. This way, auditors can skip the process of requesting and waiting for documents. Examples of records that may be included in this binder are copies of the general ledger, financial statements, the policy and procedures manual, leases, and bank statements to name a few.
Have a Designated Area for the Auditors
There should be a dedicated work area exclusively for the auditors to ensure their comfort and privacy. Preventing any tension will go a long way towards easing the process.
Have a Timeline
Auditors and management need to have an agreed upon timeline set before the audit begins. This can be altered if needed, but should be in place to give more structure to the process. This way, conflicts such as vacation time, bank/regulatory cutoffs, or holidays are accounted for.
This may seem obvious, but it is vital to have all accounts reconciled prior to the auditors’ arrival. If an account does not balance, it could mean a lack of internal controls. Therefore, all activity should be entered and each account should be verifiable.
Meeting with Staff
There should be a staff meeting before the auditors begin to inform every one of the procedures they need to follow during the audit. Staff members should be assigned responsibilities for the audit and adhere to them. This includes having a person available to answer questions or fulfill requests from the auditors. At a minimum have a single contact person for each department.
Inform Auditors of Concerns
It will take much less time to perform an audit if the auditors are alerted of any known problems, such as the timing of reporting certain transactions.
Meetings with Auditors
There need to be meetings before, during, and after the audit. The meeting before the audit should set guidelines and make arrangements for further meetings to occur. This is also the time to identify and discuss any issues that may occur during the audit. The ongoing meetings during the audit should go over any progress and problems that have come up during the audit. The meeting after the audit should center on results and ways to make the company run smoother in the future. This meeting should include the executive director, internal finance staff, and the board/audit committee. It is imperative that all of the aforementioned know the details behind any audit findings and material weaknesses. If a material weakness is exposed, a new policy needs to be put into place to correct the situation.
It is of the utmost importance to be organized, above all else. Organization will make the audit run much more smoothly and be less stressful for everyone involved. After being organized, it is important for the organization to be flexible throughout the process. If an auditor can’t find certain paperwork, be prepared to either help them personally or refer them to a designated employee that can.