Often the annual audit is viewed as a compliance requirement or an annual report card for finance departments of public sector organizations, including community-owned utilities. While the auditor’s opinion provides the assurance required by state statutes or loan covenants — and desired by the governing body — the audit process can provide so much more for management. The key to obtaining the most out of your audit is the relationship with your auditor.
Your finance team is tasked with completing budgeting, payroll, account payable, billing and receivables, capital planning, financing, budget to actual reporting and annual reporting. This affords little time to research and understand the implications of new accounting standards. In contrast, your audit team dedicates time and resources to reviewing newly released technical standards and developing tools for implementation. In addition your audit team often offers insights and training into upcoming technical standards allowing your finance staff to proactively prepare for changes and avoid adjustments or reporting delays when the standards take effect.
Having an audit team that works with other public sector organizations and municipal utilities provides an opportunity to obtain industry best practices and ideas for continuous improvements based on what the auditor has seen at your peers. As your organization grows, expands its service offerings or customer base, or considers implementing new processes or software, your auditor can connect you with other organizations that have gone through similar experiences and share firsthand knowledge and lessons learned.
Another common responsibility of finance departments of consumer-owned utilities and other public sector organizations includes implementation or revisions to internal policies or procedures. Your auditor can serve as a sounding board for such policy changes. While establishing internal control and policies remains the responsibility of management and the governing body, the auditor can provide insight into the process based on what they have observed in other organizations or how the changes may impact their risk assessment. This independent view can be beneficial to balance or challenge the consensus view that can occur within an organization.
Public sector finance departments are also looked to for help with special projects, such as researching new transactions, implementing new standards or preparing data for the analysis of a potential project. Management may find it challenging to balance the daily duties and the additional work. Your auditor, with existing knowledge of your systems, can be a resource to assist in special projects.
Though the primary deliverable in the annual audit is the auditor’s opinion or the assurance relative to the financial statements, your audit team can provide your public sector organization or publicly owned utility with much more through insights, connections and resources. Meeting with your auditor during the audit process and throughout the year will ensure you can leverage this relationship and maximize the value to your organization.
For more information on this topic, or to learn how Baker Tilly energy and utility specialists can help, contact our team.