Preparing For Your Year-End Statutory Audit
It’s that time of the year again for many organisations to receive a visit from the auditors. The year-end audit provides shareholders and other stakeholders with peace of mind over the annual financial report, however it can often be viewed as a financial burden and a disruptive, time-consuming process.
We often see clients neglecting the importance of spending time to prepare for an audit. This can result in it being a tedious and expensive exercise for both the auditor and the organisation.
While an audit may be costly, it should be viewed as an opportunity to receive feedback on the strength of financial systems. The auditor not only looks at the accuracy of an organisation’s numbers, but also observes the efficiency and relevance of key internal processes that derive their accounting numbers for the financial report.
PREPARING FOR YOUR AUDIT
There are a number of key areas that are vital in preparing of and executing a successful audit.
THE CLIENT ASSISTANCE SCHEDULE
(also referred to as the “audit requirements” list)
The client assistance schedule is your starting point in preparing and compiling information. As auditors, we are often provided with financial information with balances that do not tie to the general ledger or the trial balance.
This can subsequently become laborious for auditors and your team to understand where the differences are coming from at the time that audit is being performed, often at a time-critical period. Consequently, delays occur in delivering and completing the audit leading to additional time spent and higher audit fees.
BE UPFRONT WITH ISSUES AND TACKLE THEM FIRST
No one likes to deal with unforeseen problems and often auditors are left ‘out of the loop’ when more complex accounting or taxation matters are being resolved by the finance team.
Being upfront with your auditors and letting them assist you is key to helping you close all matters efficiently.
COMMUNICATION IS KEY
Be open and honest with your auditors. You may be asked about fraud risk factors or known deficiencies in the accounting system. Be clear with the auditors as to the areas you may find concerning, whether it is from a financial systems or a human resource point of view.
The more that auditors understand about your business, the more tailored their solutions can be.
Other prevalent ways to prepare for an efficient audit is by establishing a timetable and agenda for deliverables, setting up an electronic ‘audit file’ to file in documents, setting up read-only access of your general ledger for your auditors or preparing your finance team on the audit process and expectations.
Let the auditors know how you work and be sure to organise catch up meetings to establish understandings needed as part of the audit.
By working in a collaborative environment, you and your auditors are more likely to discover ways to minimize inefficiencies and handle issues effectively.
Should you have any questions in relation to the above or audit preparation in general, please contact us or speak to your ESV engagement partner on +61 2 9283 1666.