Facing an audit can be a daunting experience for any organisation. However, with proper preparation and a proactive approach, you can navigate the audit process smoothly and alleviate stress. With audit season just around the corner, we provide valuable insights and practical tips to prepare for an audit effectively.
Understand the Purpose and Scope of the Audit
Before diving into the preparation process, it’s essential to have a clear understanding of why the audit is being conducted and what aspects it will cover. With the recent changes in thresholds for not-for-profit entities requiring an audit, your organisation may no longer require an audit or review.
Organise and Gather Documentation
Maintaining proper documentation is crucial for a smooth audit. Ensure that all financial records, including invoices, receipts, bank statements, and contracts, are well-organised and readily accessible. Establish a comprehensive filing system that allows for easy retrieval of relevant documents, making the preparation of year-end financial reports and the audit process more efficient.
Review Internal Controls
Audit processes often focus on evaluating the effectiveness of internal controls within an organisation. Take the time to review and assess your internal control systems, including financial policies, procedures, and segregation of duties. Identify any areas that may require improvement or additional documentation and address them proactively.
Perform a thorough reconciliation of your financial accounts, with supporting documentation readily available to substantiate reconciliations (especially for areas where estimates and judgement is involved).
Engage with Your Auditor
Maintaining open and transparent communication with your auditor is crucial throughout the process. Establish a point of contact within your organisation who will be responsible for coordinating with the auditors and clearly communicate the timeline, expectations and deliverables.
Communicate with Your Staff
Ensure that your staff members are aware of the upcoming audit and understand their roles and responsibilities. If needed, provide relevant training on audit procedures, data collection, and record-keeping practices. This will help your team prepare for the audit and cooperate effectively with the auditors during the process.
Address Previous Audit Findings
If your organisation has undergone previous audits, it is essential to address any findings and recommendations from those audits. Take the necessary steps to rectify the issues identified and ensure proper implementation of any suggested improvements. This demonstrates your commitment to continuous improvement and may positively impact the current audit process.
Preparing for an audit can be a complex and time-consuming endeavour. However, remember to approach the audit with a positive mindset, viewing it as an opportunity to improve your financial practices and strengthen internal controls. With thorough preparation and proactive engagement, you can navigate the audit successfully and emerge with valuable insights to support your organisation’s growth.
Your relationship with your auditor should be more than transactional, and it should allow for open discussions. If you would like further information on this topic or discuss your personal audit needs, contact your Accru Advisor today.