With the passing of the June 30 fiscal year-end, many not-for-profit organizations are in the process of reconciling their financial information and closing their books. For many, once the books are closed that doesn’t mean they are done with their prior fiscal year. This is especially true if the organization is required to have an audit of their financial statements completed by an independent CPA firm.
Many not-for-profit controllers and their accounting departments dread the annual audit process but that dread can be alleviated with timely preparation of year-end financial documentation and frequent communication with the auditor throughout the audit process. Not-for-profit controllers and their accounting departments also should keep in mind that an audit is good for their organization and their accounting staff. An audit provides the highest level of assurance that the financial statements are free of material misstatements and have been prepared in accordance with generally accepted accounting principles. Audits also provide an opportunity for the auditor to help identify policies and procedures that the organization may need to implement to strengthen their internal controls over the books and records of the organization.
Documentation – Is your documentation ready for the audit?
- Request from your auditor, prior to the start of the audit, a list of the documents and schedules that will be needed to complete the audit.
- Give yourself enough time to prepare and gather the documents and schedules for the audit. To help save time, keep the audit in mind when you are completing the year-end close of the books. Much of the year-end close information will be needed for the audit.
- Throughout the year, put copies of new agreements and other documents that the auditor would need in a folder.
- Be organized! This can save time for all the parties involved in the audit. Consider utilizing a centralized electronic sharing folder, such as ShareFile, which prevents documents from getting lost in emails.
Communication – Are you talking to your auditor?
- Set up a pre-audit meeting with your auditor to understand the audit process, identify the necessary audit documentation, and agree upon a timeline for the audit. Make sure your auditor is aware of any deadlines for the audited financial statements.
- After the audit is completed and the auditor has issued the audit report, consider scheduling an audit closing meeting with the auditor to discuss how the audit went and identify areas of improvement for the next audit.
- The auditor and the client should be in constant communication, not just before and after the audit, but also during the audit to ensure the audit is progressing smoothly. This frequent communication can help to ensure that any questions and/or requests for supporting documentation are being addressed sooner in order to prevent delays.
Being audit-ready and maintaining constant communication will minimize the stress of the audit and help ensure a successful audit.