When planning the annual audit, there are some best practices to avoid problems during its preparation and execution. Implementing these practices will increase the value your organization receives from the auditing process and will help you comfortably meet your deadline for distributing audited financial statements to your investors.
It is management's responsibility to prepare financial statements and to design, implement, and maintain internal controls relevant to the preparation and fair presentation of financial statements. Management's first step is to have an internal accounting team capable of obtaining effective financial reports, which allows management to prepare financial statements that are presented fairly. While management may alternatively outsource the accounting function to a third-party service provider, it's important to keep in mind responsibility for the financial statements lies with management.
If you haven't yet scheduled a planning meeting with your auditor, the time to provide an update on the year is now. Among the topics of interest to the auditor are contract changes, capital activities, fund performance, new investments, and any other significant changes that occurred during the year. The expectation of the audit field schedule and its conclusion should also be discussed at the planning meeting. Ask your auditors about new accounting statements applicable to your company, which must be considered when preparing annual financial statements, such as updating accounting standards, for example.
It is also standard practice for auditors to provide their clients with a list of items required for the audit to be performed. Ask your auditor to provide this list before the end of the fiscal year, as knowing in advance the documents auditors will need will help you get ahead of the year-end process. Carefully consider each of the schedules you agreed with the auditors, because if any of them consume a lot of your time or that of your team, question the reasons and verify the possibility of obtaining the same information through another resource.
For ongoing audits, it's worth saving copies of the current year's documents for future reference. The ideal is to note the source in your accounting system and the methods used to extract personalized reports that were part of the list of requests for the year. In the absence of significant changes to your business or operations, this will reduce your efforts in extracting those reports. This step is useful if you had a turnover in your accounting department and a new employee has taken responsibility for preparing and submitting information to your auditors.
It is very important and recommended that before providing any document requested to the auditor, it is verified that the information is in accordance with the balance sheet and/or financial statements prepared internally. Even if the corrected information is in accordance with the balance sheet, keep in mind that your auditor will want to know what changed and the reasons for the incompatibility. In this case, it is worth remembering that any reconcilations during the auditing process increase the cost as they extend the schedule. Early review can save time and help staff focus on more important issues.
During the auditing process, auditors will ask additional questions and will likely need to talk to you or your team frequently. Assigning a person to handle all audit-related requests and providing timely answers to all your questions will ensure an efficient audit. Then, a weekly or biweekly audit meeting between management and auditors is sufficient to discuss progress and resolve any issues identified.
It is a standard procedure for auditors to request confirmations of account balances (from suppliers, clients, banks, lawyers, and other relevant issues). When inaccurate balances or incorrect information are provided on the confirmation, someone needs to take the time to get the information corrected. To improve the accuracy of confirmations, the ideal is to prepare them as close to the confirmation date as possible. Investment accounts are also an area closely examined by auditors. You may also consider including qualified professionals on your team who can contribute to the implementation of your assessment policies and procedures.
Finally, encourage the use of technology and request access to all the available tools that your auditor's company offers. Auditing firms around the world invest significantly in technology and solutions that make work easier and more productive. Some of the common technological solutions offered by auditing firms to their clients include the use of secure file sharing rooms and the use of electronic signature technology services. The use of available technological solutions can significantly increase efficiency, help comply with applicable data protection rules, and add value to the auditing process.
TATICCA — ALLINIAL GLOBAL, always seeking new technological resources to offer relevant content and facilitate the daily lives of its clients, has an exclusive area on its website for clients, with the objective of exchanging data and information with work teams, thus eliminating problems of sending files, among others.
Contact TATICCA — ALLINIAL GLOBAL, which provides integrated auditing, accounting, tax services, corporate finance , Financial Advisory , Risk Advisory , technology, business consulting and training. For more information, visit www.taticca.com.br or email taticca@taticca.com.br. Our company has professionals with extensive experience in the market and has certified methodologies for carrying out activities.