Notes from the Audit Clinic; Surprises
Joan M. Renner, CPA, CGMA, Director 501(c)(fit!)
Welcome back to the “audit clinic”. Last week I launched the “audit clinic” to help nonprofits with some of the more common audit headache symptoms and remedies. Every nonprofit leader has experienced a few. Let’s see what’s going on in the audit clinic today…
Nonprofit (NP): “Our last audit was a real ordeal. Everything was quiet at first, going along fine, and then we got these drafts with big adjustments and negative findings—and some of them weren’t even right.”
Audit Clinic (Clinic): “Hmm. Sounds like another Exploding Audit.”
NP: “Is that a thing?”
Clinic: “Unfortunately, it can be. It’s not as dangerous as it sounds, but it’s really annoying.”
NP: “I sure felt like exploding when I got those drafts. What causes it?”
Clinic: “Well, we can’t be sure, but it has to do with a shortage of two-way communication during the audit.”
NP: “How can that be? Shouldn’t they be keeping me in the loop?”
Clinic: “Generally accepted auditing standards don’t require your auditors to keep you informed during the audit. Those drafts contain all the required communications—after the audit is done.”
NP: “So what can I do to get rid of this headache?”
Clinic: “First, hire what you value. If you want timely two-way communication with your auditors, ask for it in the RFP.”
NP: “OK, what else?”
Clinic: “Schedule an update right at the end of fieldwork. You see, by the time the audit team leaves your office, they already have all the information they need to develop most of the audit findings. They know about any loopholes in your system, they know what accounts need an adjustment and they know how their testing turned out. They also know what information is still missing. The update even gives you a chance to weigh in if they have misunderstood something.”
NP: “So how do I get this update?”
Clinic: “You’re the client. Schedule it with the audit manager.
NP: “Thanks, Audit Clinic. I’ll let you know how it works out.”
What can we learn to promote a more positive audit experience?
Ask for an update. When planning the audit schedule, include an update right at the end of fieldwork. Find out about any proposed adjustments, potential findings, missing information, remaining procedures and the schedule for completion.
Hire what you value. When selecting auditors, ask about their plan for timely two-way communication during the audit.
Learn more about supporting a positive audit experience in our on demand webinar, Acing Your Audit—managing your audit from start to finish:
Read about last week’s audit clinic; Great Expectations.
Tell us about your audit headaches and we’ll try to address them (anonymously) in the audit clinic.
Learn more about controllership in our 501(c)(fit!) Financial Intensive Training seminars coming soon.
© 2017 501(c)(fit!) All Rights Reserved.