4 Best Practices to Prepare for Your Year-end Audit

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4 Best Practices to Prepare for Your Year-end Audit

April 7, 2022

Author: Chelsea Russell, CPA

Each year goes by faster than the last and before you know it- your year-end audit is right around the corner. Collectively, we can all agree that the audit process should be quick and easy, but we often face audits that never seem to end. Have you ever wondered what you can do to make an audit go smoothly and be as efficient as possible so that deadlines can be met? This is a great opportunity for you to learn about how your organization can have a more efficient audit process and how your organization can continue to improve procedures surrounding audit preparation. As an auditor that is involved in many not-for-profits, I’d like to share some best practices to help you prepare for your year-end audit.

Have a Planning Meeting
t’s never too early to start reaching out to your auditor. Having a planning meeting with your auditor a month before your organization’s year-end is encouraged. This meeting will serve many purposes, such as, reminding everyone of specific due dates, discussing significant activity over the last year, and deciding on a start date for the audit based on your readiness.
Establish a Timeline
Once you and your auditor have discussed due dates and a start date for the audit, you should start preparing for the audit early by asking for your auditor’s data request list. Review the list with your auditors, ask for what items are priority for testing purposes, and establish an internal due date for your team. As you and your team start preparing information for the audit, have regular check-ins with your auditor as you approach each due date and the start of the audit.
Reconcile All Significant Trial Balance Accounts
Prior to starting the audit, all significant trial balance accounts should be reconciled, and you should double check that the supporting documentation agrees to the trial balance accounts. This is a great opportunity to make sure you have the necessary internal control procedures in place and may present an opportunity for improvement. To prevent a delay in the audit, the earlier you can start your year-end closing process and reconciliation of accounts, the sooner you can review the audit support for potential errors before handing documents over to the auditors.
Compliance requirements
The level of compliance requirements you have to adhere to depends on the funding your organization receives (State, Federal, Grants, or Donations). A best practice would be to review your funding sources and determine the compliance requirements needed well ahead of the annual audit. Depending on where your funding is coming from can dictate the level of compliance requirements you have to adhere to. For example, if you receive federal funding or federal funding passed through the state, this could require additional audit testing to be performed and additional time incurred by the auditor. It’s best to review all funding sources on a regular basis and communicate any changes with your auditors.

Once you invest your time and try these best practices, you’ll be able to develop your own processes throughout the year, keep the information organized and be ready for your next audit.

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This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.

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