Five Things to do Before, During, and After Audit Time

If your business requires an annual audit, here are a few ways to greet the experience with a cool head and reasonable assurance.

1. Keeping in mind that your auditor works for your benefit, rather than against you, is a good first step. Auditors are paid by your firm or organization, and for that reason at the very least, they need to have an open and friendly relationship with you. If you or your employees feel intimidated or uneasy around the CPA's and accountants working on an audit for your place of business, it may be time to consider a new engagement. On the other hand, auditors work inside a code of ethics, and this is to your advantage. If anyone in your firm or non profit organization is strangely annoyed by an auditor who is otherwise okay with everyone else, the employee may have a reason to be paranoid. Subtle behavior like this can be a huge red flag for you. Pay attention to anything that seems odd or out of the ordinary and be sure to communicate this to your auditors.

2. Get your books organized and have a full set of financials as well as a clean trial balance ready before the audit begins. This not only shaves tons off your final bill, but also makes sure you are knowledgeable about the state of your firm or organization from the start. Do not wait for your auditors to show you any discrepancies. Many firms never even make the suggested journal entries from the previous years, which is a blatant sign to the auditor that there is no one keeping a shrewd eye on the financial health of your firm or organization. If your auditors see this type of irresponsibility from the start, the benefits you may have been able to glean from the experience may already be tarnished. If the auditor has to spend half his or her time cleaning up your mess, the actual time spent doing quality testing and analysis can be cut drastically.

3. Remember your audit is more than just a rubber stamp of approval. You want your firm or organization to get an unqualified opinion, but moreover, you want quality feedback. A good auditor will do this, especially if you expect it. Most audits are prepared on a tight budget, and getting a project done by deadline sometimes means auditors have to work overtime for you. This is a big personal investment on their part. They spend a great deal of time and energy working on your audit, and in some ways, it is a let down to walk away without the opportunity to discuss any findings or relevant issues which may have cropped up. Giving your auditor the time to give you a person-to-person response, rather than simply in a management letter, reassures you that your firm or organization's financial statements have been adequately evaluated.

4. Did you know that with changes in laws over the past several years, auditors are now required to do a walk through? If you are not available to walk them through the process of any given financial transaction, then they may ask an employee, or worse, have to get the information from someone on the phone who may or may not know the whole process. This is sad, because many business owners never take the time to review the process on their own. Be sure that you or responsible party in management participates in the walk through and takes good personal notes on any things which could be improved on. This is a golden time for you to review the efficiency of how your office works, and gives the auditor the opportunity to point out any risks or situations you may improve on. These things do not often end up in the required paperwork. A bit of friendly advice here and there on a real walk through can increase your firm or organization's productivity and efficiency by quite a nice margin!

5. Follow up in a timely manner. A meeting after the audit is a good way to begin the process of completion, but there are several things you will still need to do. Review any findings and correction plans and take fast action to clear them. But even if you had no findings, there are likely things that you or your audit team uncovered which can be improved on. Pay attention to these details, because they may be things which could become a serious problem if not addressed on a timely basis. Have at least one or two questions for the auditors at the end of the audit, and be sure to follow up on any advice given.

Keeping these simple things in mind before, during, and after your firm or organization's audit experience can not only improve your bottom line, but the overall health of your company.

Karen Kay holds a Master of Business Administration and works for Grantham Poole CPA firm in Jackson, MS.

She is also a blogger who enjoys writing on several different topics. Her main blog is http://cafeelsewhere.com

She and her family live in Jackson, MS.