Year-end audit planning requires communication, compiling information, and comparing to last year’s report.
Your company’s external audit can be a busy and stressful time. While worrying about your normal day-to-day responsibilities, you must take on the task of providing your auditors with information that they need to complete the audit. Sometimes, the tasks can seem overwhelming. It is easy to prioritize daily demands and procrastinate preparing for an audit; that’s why we are here to encourage you with a few easy steps to successfully prepare.
Communicate with Your Auditor
Since the year-end and month-end close can be overwhelming for the financial department, if there is information you can send to the auditor before the end of the year, it would be beneficial. Items such as internal control narratives, meeting minutes, budgets, any new contracts, debt agreements, or leases entered into during the year, and interim financials are examples of auditor requests which can be completed before the end of the year. This would also be a good time to talk about any complex accounting issues with the audit team, so there are no big surprises when the audit begins.
The audit can be successful if you focus on your company’s year-end close. You want to ensure that you are providing a final trial balance with reconciled accounts. This enables the auditors to be more efficient.
Complete Audit Request List
One of the first things that you should be receiving from your auditor is an Audit Request List. This list will let your team know the items that are needed to complete the audit. If multiple employees are working on providing these requests to the audit team it is important to clearly identify the needed information, and a due date for the information requests.
Comparison with Last Year’s Report
Another good idea is to set up an internal report comparison to the previous year. This is a great opportunity for management to look at the reports and help address variance questions that auditors may have. If your accounting team takes the time to look at the reports, you can already have answers and support ready for the audit team’s anticipated questions.
Preparing for your audit by planning ahead will help to make the audit less stressful. Communication is also key, not only within your accounting team but with the auditors as well.
At Wilke & Associates, CPAs, we know that 2020 has been a stressful year for all of us. Let’s make it less stressful by being prepared for the audit. Remember this quote from Ben Franklin, “By failing to prepare, you are preparing to fail.”
Amanda is a general ledger manager and business advisor at Wilke & Associates. She currently serves closely-held businesses using her prior experience as a corporate accounting manager in the manufacturing industry. Her resume includes serving clients in various business sectors to include distribution, logistics, real estate, and pension plans.