With the passing of June 30, many not-for-profit organizations are in the process of reconciling their financial information and closing their books for the year-end. For organizations subject to audit requirements, the next step is to have an audit of their financial statements completed by an independent CPA firm. 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 (assuming an unmodified opinion).
A goal for both organizations and their auditors is to have an effective and efficient audit. One of the main ways to have an efficient audit is to properly focus on what is needed early in the planning stage. This can be accomplished through an arrangement or request Letter. An arrangement or request letter is typically sent from the auditor to the client before the fieldwork for the audit begins. The letter should be a detailed list of schedules and documents that need to be prepared and given to the auditor, including bank statements, trial balance, board minutes, and other information. The requested items should be available before the on-site audit fieldwork starts. The auditor and the client should have a meeting during the planning phase to develop a mutual understanding of expectations from both parties. This mutual understanding will enhance the efficiency of the audit process.
The auditor and the client should be in communication before, during, and after fieldwork to make sure the audit is progressing smoothly and that questions and requested supporting documentation, if any, are being resolved.
Once on-site audit fieldwork is completed, the audit is not done. After fieldwork, there are other procedures the auditors perform including technical review and follow-up questions. These items are essential for the completion of the audit process, and the client should make every effort to respond to them in a timely fashion.
After the audit is completed, the auditor will issue an audit report, which is addressed to those charged with governance, typically the board of directors. The auditors will also issue a management letter to the Board, listing deficiencies in the organization’s internal control system discovered during the audit process, if any, as well as suggestions to strengthen operational controls.
Being audit-ready will minimize the stress of the audit and help make sure that deliverables are issued on a timely basis.