How to Plan for your Year-end Audit
posted Dec 3, 2012 in the Business Blog
Year end is fast approaching for corporate America, and we all know what that means; closing the books, tax planning, and of course, the extended visit from the auditors. As an auditor, I know this time of year can be stressful, but I have outlined a few recommendations below to ensure a smooth year-end audit process.
- Planning Meeting. Conduct a planning meeting with key members of the audit and tax teams. If you are not already doing this, you are missing an opportunity to develop expectations (both yours and the auditors/tax professionals). Sitting down and having a discussion in advance of year-end allows everyone to be on the same page. Some topics of discussion should include: year to date numbers, projections for year-end, unusual transactions during the year, expected year-end tax payments, timing of work, deadlines, significant changes in the business and any additional questions that may be on your mind.
- Send electronic files early. The more time the auditor has to digest the information you provide, the more organized and streamlined the audit process will be. Workpapers and schedules you prepare should always be in electronic format. Most accounting firms are paperless these days and it is most efficient to use your schedules in excel or word for their workpaper documentation. Receiving the trial balance as soon as it is fully adjusted is crucial, especially if your auditor assists in the preparation of your financial statements. Tax workpapers can be given directly to the auditors. The systems audit and tax professionals use are often integrated.
- Return confirms. Make phone calls and send emails to get those confirms back. Third party confirmation is a required part of the audit process. Whether it is accounts receivable, inventory or investments, we (your auditor) need those confirms back to conduct an efficient and effective audit. HINT: Many times your customers or vendors don’t understand the confirmation process, so a quick email or phone call from you to let them know the process will speed up the response.
- Be ready for scheduled fieldwork. If you have done everything above, you are probably 100% ready. Being ready for fieldwork is crucial to the audit process and staying on schedule in order to meet your deadlines. Many firms are tightly scheduled due to busy schedules and holiday vacation time, the need to stick to the scheduled time for fieldwork has become increasingly important. Anticipate spending time responding to auditor’s questions and providing additional documents as needed while they are on-site.
There are of course many other tips to ensure a smooth audit, but following the above pointers will make your job easier and your year-end audit and tax work much more streamlined. In turn, this will help minimize your professional fees and enable you to receive final financial statements and tax returns sooner. For questions or help preparing for your year-end audit, contact any member of the KLR Accounting & Assurance Team at 888-857-8800.