Tips for a Smooth Audit
Posted on Wednesday, January 15, 2014 Share
An audit isn’t usually something that the financial staff of a nonprofit looks forward to. Auditors scrutinize their work, ask them questions and prevent them from performing their normal responsibilities. But by properly preparing for your audit, you can reduce the stress on both yourself and your auditor.
1. Have documentation ready. One of the most important steps that an organization can take is to have accounting records up to date, accurate and organized. Often times the auditor will provide the organization with a list of items needed for the audit. By providing these items to your auditor at the beginning of audit fieldwork, in an organized manner, it will reduce the number of times your auditor will have to ask you for additional information. It is also beneficial to ask your auditor in what format they would prefer to receive the documentation (paper, Excel, PDF, etc.).
2. Reconcile all accounts. This may seem obvious but make sure all of your bank accounts have been reconciled to both the bank statement and trial balance. Also make sure significant accounts listed on your trial balance have proper supporting schedules that agree to the trial balance.
3. Take an inventory of fixed assets. Did you purchase any new fixed assets during the year or dispose of any old ones? Make sure you take an inventory of all of your fixed assets at year end and update your fixed asset listing for any current year activity.
4. Inform your auditor of any unusual items. Did anything unusual happen during the year? Did you receive an unusual source of revenue and weren’t sure where to record it so you buried it in contributions? Tell your auditors of anything unusual that happened during the year at the start of the audit. Don’t wait for them to find it.
5. Review internal controls. As part of the audit procedures, auditors are required to understand your organization’s internal controls. Make sure you have your internal controls documented and review them each year for any changes. This will save you from the auditors having to ask you to update it.
6. Be available for questions. The length of fieldwork varies and could last several days. During this time the auditors may need to ask you questions. It is important that key employees be available during the time the auditors are in your office so the fieldwork and the audit are not held up.
Spending time preparing for your audit beforehand can highlight potential issues that can be resolved before audit fieldwork, thus making for a smoother audit.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.