Tips for a Successful Audit

The end of the year is fast approaching and not only does that mean we are in the holiday season but, for many companies that means it’s time to start preparing for the annual audit.  Below are some tips to help make the audit process smoother for everyone.

  1. PBC (Prepared By Client) List.  The auditor will give you a PBC list as to what workpapers and information they will need for the audit.  Have the list of workpapers and information ready ahead of the fieldwork dates so that you can give them to the auditors when they walk in the door.  Consider assigning preparation to staff based on responsibilities along with due dates.  Review the workpapers that you prepare at year end and determine if there are any that can be prepared during the year as you do the monthly accounting.  If you are not able to complete the workpapers before the fieldwork starts, discuss with the auditors as to which ones should be completed first.
  2. Ask Questions. As you review the PBC list, if you are uncertain as to what the auditor is requesting or what format that they would like the workpaper to be in, ask for clarification before fieldwork.
  3. Final Review. After the audit workpapers have been prepared, review to determine that the information agrees with the general ledger activity and the ending balance agrees with the trial balance.
  4. New or Unusual Areas. Before fieldwork, discuss any unusual transactions that the company might have entered into during the last year.  Also discuss any area or accounts that you are unsure were accounted for correctly before the audit.
  5. Review Past Journal Entries and Comments. Review the audit journal entries that were made in the prior year and determine if any can be eliminated in the current year by adjusting the account before year end.  Review the management letter and internal control letter for comments that can be corrected for the current year.
  6. Be Available. Be available for the auditor while they are on site for the audit. Try not to have key personnel away from the office for any length of time during the audit period. If key personnel have scheduled meetings or will need to be away from the office for a short period of time, discuss with the auditor before or at the beginning of the fieldwork so that they can plan their work accordingly.
  7. During the entire process from planning to the issuance of the financial statements, maintain communications regarding open items, expectations to obtain preliminary and final financial statements, and if the auditor is to present the financial statements to the committee/board of directors.
  8. Approval of Preliminary Financial Statements. Review the preliminary financial statements in a timely manner.
  9. Secure Information. If the schedules contain sensitive information, consider using either your company’s or the auditor’s secure portal.

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DISCLAIMER: This blog is provided for informational purposes only and is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant. Presentation of the information in this article does not create nor constitute an accountant-client relationship. While we use reasonable efforts to furnish accurate and up-to-date information, the evolving landscape surrounding these topics is supported by regulations or guidance that are subject to change.

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