Five ways to prepare for an audit

Five ways to prepare for an audit

An audit does not need to be a complex, frustrating ordeal. You can achieve a smooth, efficient audit that provides major value to your organization by adhering to one principle: preparation. Lay the groundwork for success by taking these simple steps ahead of time:

Communicate your priorities

Prior to the audit, draft a list of annual activities you believe to be most significant and submit it to the auditing firm in advance so they have time to review and ask questions. Also, spend time with the auditor to discuss how your organization has changed in the last year, and how these changes could impact your audit’s priority areas.

By doing this, the auditor will design an audit plan that incorporates your priorities and provide insights to address them, making the work much more useful to your organization.

Establish a tracking system

Organizing data will help you streamline your audit, reducing the time you may need to spend with the auditor and the time the auditor spends locating documents — which, in turn, reduces your costs. This is why implementing (and proactively using) a tracking system is so helpful. Tracking keeps the work organized and helps the audit get completed more quickly.

There are several approaches to tracking. Electronic file storage sites like Huddle and Sharepoint maintain an upload history of important documents and enable you to track progress of information requests in real time. Alternatively, you could build a proprietary application, or even simply create a folder directory on your network.

Any of these methods can help keep the audit in order and enable your auditor to work efficiently. Plus, it will make it easier to navigate the audit documents whenever you need to look at them in the future, including when you prepare for the subsequent year’s audit.

Participate in the kickoff meeting

A kickoff conference (whether in person or over the phone) is essential. It provides an opportunity to talk through your needs, iron out the logistical details, debrief from the previous year and establish your expectations for this year. Kickoff meetings also get everyone on the same page, which leads to greater overall satisfaction.

Prior to the kickoff, work with the auditor to create an agenda that gives the discussion structure and ensures that both sides get what they need out of it. Prepare by bringing any questions you have so you can leave the meeting confident you understand the scope and strategy for the audit.

Topics to address include:

  • Current-year activity and transactions (and their impact on the audit)
  • Outstanding questions about prior year’s audit
  • Implementing prior-year suggestions
  • Organization’s response to prior year’s management letter and internal control report
  • Status of the preliminary work and initial information requests

Prepare your staff

Independence is key to the auditor-auditee relationship, but there is also a high degree of collaboration to the process; your staff will need to communicate and work with the auditor throughout. Onboarding your team to the audit process ahead of time minimizes the disruption in their day-to-day work while the auditors are onsite, minimizing lost productivity.

To get your staff ready for audit season, encourage them to make audit assistance an official part of their workload (and clear some room in their schedule for it, if necessary). Consider adding a check-in call to your staff’s schedules so they interface with the auditors regularly and make sure the auditors have everything they need. A mutually cooperative environment simplifies the audit for all parties involved.

Plan for timing of testing and review

The auditor will create an audit plan that approximates the amount of time each audit area will take to complete. The audit team will also communicate with you any anticipated changes to this plan as the work occurs. A mutually agreed-upon plan that includes anticipated timing for each step in the audit process will help your deadlines get met. This plan should also include your review of the draft audit deliverables prior to issuance.

By taking a proactive approach to your next audit, you can create the conditions for a seamless process that provides the maximum benefit to your organization.

For more information on this topic, or to learn how Baker Tilly state and local government specialists can help, contact our team.

© 2024 Baker Tilly US, LLP

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