By: Monica Duarte, CPA, MSA
Financial statement audits can be incredibly disruptive to your business. At Osborne Rincon CPAs, we understand – and we know how to make it less painful. Every good auditor should be able to anticipate client needs and frustrations, for example. With some careful planning, the auditor can relieve much of the pressure.
However, there are some things that clients can do themselves to prepare for audits. Taking the time to lay the groundwork ahead of the auditors’ arrival will make the audit fieldwork go as smoothly as possible. Of course, there will be different challenges each year, but advance preparation can help prevent many issues.
- Debrief on the prior year audit – Meet with the auditor well in advance and have an honest conversation about what went well and what did not during the previous engagement. Be open to listening to what is said and be candid with your feedback.
- Obtain the request list – Auditors have standard lists of items they need each year. Ask them to send it early so you have time to ask questions and obtain clarification. At a minimum, the list should include a description of the items needed and the date the information is due. Use it as a planning tool to map out how you can provide the information in a timely manner. When necessary, communicate unrealistic request dates to the audit team.
- Write down your processes – If you have written narratives already, update them. Being able to provide the process description to the auditor in advance will enable them to ask better questions and save time on staff interviews.
- Review the prior year management comment letter – Your auditor likely gave you a letter which detailed the recommendations for internal controls based on the prior year audit. Any improvements or changes based on the letter should be included in your updated process narratives.
- Review employee vacations – If key financial employees will be on vacation, make sure you do not schedule fieldwork around that time. If auditors are not able to obtain the answers or information they need, your audit will drag on. Evaluate your business and ensure you correctly identify key employees.
If you are in need of a financial audit, Osborne Rincon CPAs can help. Our staff look forward to serving you. For more information please give at 760-777-9805.