Timely audits are important for organizations. Timely financial statements can help an organization plan for the coming year. Timely financial statements will also allow organizations to make smarter budget and financial decisions. Second, timely internal control reports and management letter comments can help organizations’ correct issues before they create bigger problems. Auditors often have very helpful recommendations on how to correct various issues and save the organization time, money, and resources in the process.
How does an organization receive a timely audit report?
First, it is important to have everything reconciled and ready for the auditor as soon as possible after year end. Auditors, like many others, schedule out their work or audits a few months out at a time. If you are not ready when you are scheduled to be this can cause scheduling problems and make it hard for the auditor to complete your audit. A few things are very important for the auditors to get starting planning for your audit. Most auditors like to receive the following items a few weeks prior to their scheduled onsite audit work; a final trail balance, detail schedules, account reconciliations, and updated bank confirmations. A final trial balance allows the auditor to see what kind of numbers they are working with and how they compare to prior years. This allows them to determine what sections they need to detail test and how many testing selections they need to make. Once auditors know how many selections they need to make they need detail reports that reconcile to the trial balance in order to make their selections. If auditors are provided this information prior to coming on site they can make their testing selections and provide the selections to the organization ahead of time. This way the organization can have the detail pulled when the auditors arrive onsite. Lastly, it is important to let the auditor know if you opened any new bank accounts or took on any new debt during the year. Most auditors will send confirmations to financial institutions to confirm the balances of the organization’s accounts at year end. It takes several days to get these confirmations completed and mailed back to the auditor. If the confirmations can be set up, signed, mailed, and returned prior to going onsite for the audit it will make the audit process go much faster. If the organization doesn’t let the auditor know about new accounts and waits until they are onsite to provide the new information the auditor then has to wait another several days to send out and receive new confirmations thus adding a week or more to the audit completion date.
Secondly, it is important to be available during the onsite work to answer any questions the auditors might have and to pull any additional information the auditors request while on site. The more of the audit that can be completed while onsite the better. It can be hard to audit by email and it is not efficient. Again, if the organization is not ready when the auditor comes on site and the auditor has to finish the audit later it can be difficult to find the time to finish the audit. As mentioned early auditor’s set up their schedules a few months out at a time. Even though auditors have their schedules planned out they understand that things don’t always work out as planned. It is best for auditors if you let them know as soon as you know you are not going to be ready or available during your scheduled onsite work dates. If you don’t let us know we can’t re-work our schedules. If we show up and the organization is not ready we often waste time that we could be working on another audit. It is best for auditors if they can come on site and complete all the work necessary during that time. If we leave with open items it makes our audit less efficient which can lead to higher fees for the organization.
Every organization has different closing processes. Figure out which process works best for your organization and help improve the timeliness of your organization’s audit. Hopefully, by improving your audit timeliness, you can improve the organization overall with timely financial statements and by timely implementing internal control recommendations. Please reach out to H&M for help with all of your audit needs.