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Strategies: Best Practices for Coordinating the Annual Audit

By Net Assets posted 07-09-2018 09:40 AM


Financial Management |

It doesn’t have to be an exercise in frustration. Tips from a 20-year audit veteran.

From the July/August 2018 Net Assets magazine

Article by Melissa Woodin, The Hotchkiss School

Do you dread your annual audit because it takes so much of your time? What if I told you there are some simple things you can do to make the audit more organized and efficient? I have been coordinating annual audits for almost 20 years now. When I started, I would get frustrated by the auditors asking for the same documents over and over. I struggled to stay on top of their endless requests. Over the years I have learned what it takes to have the audit run efficiently, saving our school time and money.

A typical independent school audit takes place 30 to 90 days after the end of the school year. The specific dates depend on when your board or audit committee expects to review audited financials. Be sure you’ll have enough staff on hand during the audit so you can quickly fulfill on-site requests.

Before the Audit: Check in with the Auditors

A few months prior to the audit field work, have a conversation with your auditors about the timing and expectations of the field work. Ask the following questions:

  • Do the auditors have a client share site where you can exchange electronic documents?
  • Will the audit have any special focus areas? This will help you ensure key school employees from those areas will be available during that time.
  • Will there be any new members of the audit team? New people generally require more of your time. You’ll want to acclimate them to your school and processes that may be different than other organizations they have worked with.
  • What are the audit partner’s other expectations during the field work? Clarify the hours the auditors will be working and if someone from your office needs to be there at those times. I have found that most auditors adjust to the typical hours your office works.
  • How soon can they provide the Prepared by Client (PBC) list?

For the Audit: Assign and Organize the PBC List

The PBC list is your bible during the audit. This lists all the documents the auditors will require when the audit begins. Ask for this as far ahead of time as possible to help you prepare everything before the auditors arrive. Recommended steps:

  • If the items on the list are not already numbered, assign a number to each request.
  • Set up an electronic folder on your computer or shared drive for the audit.
  • Create subfolders for each category that correspond the categories on the PBC list.
  • Work with scanned documents (see below), save audit documents and support for them using the corresponding number on the PBC list.
  • Assign each task to the appropriate person, remembering that you can’t do it all yourself. Have assignees save the documents in the audit folder, naming the file as above.

Keep Documents from Getting Lost

My best advice is to scan all audit documents and submit them to auditors electronically. Save these items using the PBC number system above. If the audit firm has a share site, upload the audit documents there as well.

Avoid giving hard copies. If the auditors must review original documents, ask them to do so on site. Don’t let the files leave the office.

After the Audit is Complete

Always find time to meet with the audit partner and go over what went well and what both sides could do better next year. Keep track of onsite requests that were not on the PBC list, and discuss if these requests should be added to next year’s PBC list.

Melissa Woodin is controller at the Hotchkiss School, a grades 9–12 boarding school with 600 students in Lakeville, Connecticut.

Download a PDF of this article.


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