A financial audit can be a stressful part of operating a business, especially if you feel you are not fully prepared. However, financial audits should be seen as an irreplaceable tool that can be relied upon to strengthen financial systems and give you and your staff confidence in the strength of the business. PrideStaff Financial has some tips that will help you prepare for your next financial audit.
What auditors will ask for:
Auditors have very specific guidelines for the information they need in order to conduct a financial audit. In order to prepare, you should be well versed in the type of information that will be asked for and prepare it ahead of time. Auditors will ask for broad financial statements; evaluating the information in basic financial statements and compare them to the numbers you’ve reported. They will look at: existence, completeness, rights and obligations, valuation and allocation, and disclosure. Auditors may ask you to explain significant “actual-to-budget” variances, so be prepared to explain any changes in management or ownership, operations, raw materials or distribution, and union relations or industry developments that may impact your business. According to the Journal for Accountancy, establishing a designated file for regulatory agency correspondence and for copies of new or changed documents helps greatly during and after the audit process. These documents can be anything from fixed asset additions, debt agreements, leasing arrangements, lawsuits, complex transactions, technology modifications and major customers and vendors.
Prep your teams ahead of time:
A good business owner will usually have a frank discussion with the auditor ahead of time to assess what items the auditor will need upon arrival. Once you have your check list, the audit procedures that will be performed should be discussed with management. Determine the contact people for specified areas of the audit, to avoid any potential scheduling conflicts. Make sure that lines of communication are open and fluid so that things run smoothly and quickly. This will save you time and money.
Plan for temporary support:
All businesses conduct financial audits; it’s the way of the working world. Most businesses will have audits proactively done to avoid outdated ledgers or non-compliance issues with the IRS. One way to plan for a successful audit is to hire temporary staff to help compensate with the overtaxed staff that will be focused on the audit. Having flexible staffing plans built into your procedures allows you time and money needed to pull resources when it’s called for. Since certain departments and managers have to devote time to the auditors, it pulls them away from the everyday workload that needs to be done. Temporary staff can help lighten the burden. In today’s economy, most business candidates are well versed in bookkeeping, accountancy and finance. Whether working with the staff to prepare audits or on project-specific tasks, temporary staff can ease the minds of those dealing with a financial audit and keep business running smoothly during such a stressful period.
PrideStaff Financial vets many highly trained candidates in business and finance. We are prepared to help you with your temporary staffing needs so that you can focus on what’s really important—keeping your business strong and confident.