Some non-profit organizations, and for-profit organizations that receive government service contracts, have a requirement to produce audited financial statements. Even when it’s not a requirement, non-profit organizations can get value from an audited set of financial statements when applying for grant funding and other contributions.
As a Certified Public Accountant (CPA) specializing in financial audits, I understand the importance of thorough preparation before commencing the audit process. Preparing adequately not only ensures the accuracy and integrity of your financial statements but also contributes to a smoother audit experience and potentially saves your company valuable time and resources. Here is a list of steps your organization should take before seeking the services of a CPA for auditing your financial statements:
1. Organize Financial Records: Ensure that all financial records, including balance sheets, income statements, cash flow statements, and supporting documents, are organized and readily accessible. This streamlines the audit process and minimizes delays.
2. Reconcile Accounts: Conduct thorough reconciliations of all accounts, including bank accounts, accounts receivable, and accounts payable. Resolving any discrepancies beforehand reduces the need for extensive adjustments during the audit.
3. Document Procedures: Document internal controls, accounting policies, and procedures followed by your organization. Clear documentation provides transparency and helps auditors understand your financial processes, leading to a more efficient audit.
4. Address Significant Transactions: Identify and address any significant transactions or events that occurred during the financial reporting period. This includes acquisitions, disposals, restructuring, or changes in accounting principles. Properly disclosing these transactions ensures compliance with accounting standards and facilitates audit procedures.
5. Perform Internal Reviews: Conduct internal reviews or preliminary assessments of your financial statements to identify any errors or irregularities. Rectifying issues proactively mitigates the risk of audit findings and associated penalties.
6. Allocate Sufficient Resources: Allocate adequate resources, including personnel and technology, to support the audit process. Providing auditors with timely access to information and resources expedites the audit and minimizes disruptions to your operations. In a small organization with a small staff, it is important to make time to respond to auditor queries.
7. Plan Ahead: Plan ahead and schedule the audit well in advance to avoid last-minute rushes and conflicts. Early planning allows ample time for preparation, review, and resolution of potential issues, reducing stress and minimizing audit fees.
By following these steps, your organization can streamline the audit process, enhance audit quality, and potentially reduce audit fees. Here is a link to a guide for small non-profits preparing for a financial audit published by The Virginia Society of CPAs, It contains good information related to preparing for an audit.
As a CPA, I am committed to partnering with your company to ensure a successful audit experience and uphold the integrity of your financial reporting.
