Planning: The Key to a Successful Year-End Audit

Christopher P. Stenmon Principal, CPA, MST

3 July 2018

“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

We are all familiar with this quote, and it is especially accurate when it comes to year-end audits. Planning and preparing for an audit throughout the year not only makes the entire process much less stressful, but it also yields the best possible end result.

I have been at the center of countless audits throughout my career, and, based on this experience, have comprised a list of action items that should be implemented now in order to make your 2018 year-end audit a success.

1. Facilitate A Culture of Communication.

I cannot stress enough the importance of active communication between the auditors and the auditees. Whether it is new accounting pronouncements and their application to the college, university or foundation, or it is a proposed new transaction, communication throughout the year between the client and auditor is extremely important. As an auditor, I would rather be informed throughout the year about specific material transactions rather than until a couple months before year-end or even at field work time. Communicating in advance allows both the auditor and auditee adequate time to research and advise effectively and efficiently.

2. Prepare Documentation Ahead.

Auditors should prepare document request lists which include workpapers and schedules for audit planning and audit field work at least a month or two in advance of the client’s year-end. Auditees should do their best to gather as much as the documentation requested before the auditors arrive.

3. Create A Timeline.

All audits should have specific assigned dates and deadlines in writing. These deadlines should be agreed upon by both the auditor and auditee. Expectations should be set from the very beginning on both the auditors’ and auditees’ sides so that each party understands the trickle-down effect of missing a deadline.

4. Create A Method of Tracking.

Once the expectations have been set on dates, there needs to be an agreed-upon method of sending and receiving audit information. I have found secure electronic files storage sites or internal portals to be the best way for auditees to provide information requests to auditors. It also allows for one central location to track open items and

5. Meet Regularly.

All audits should have an initial meeting or conference/video call. These meetings may include members of the audit committee and all those involved throughout the audit process. It provides the opportunity to introduce new
employees as well as a chance to work out certain logistical requests. The most efficient audits are the ones that continue to have meetings throughout the audit process between the auditor and auditee.

Therefore, at a minimum, I recommend a closing meeting on the last day of planning and fieldwork dates. In addition, there should be a meeting to discuss drafts of the financial statements and management letter, as well as a final meeting with the audit committee and Vice President of Finance/CFO and controller to review and approve
the issuance of the final financial statements.

6. Review and Improve.

After the financial statements have been issued and reviewed, I recommend both the auditor and auditee review, internally, how the overall audit process went. Determine what went well and what didn’t go so well. Each side should document at least 3-5 things they plan to do differently in future audits. Keep this list and use it when each side begins to plan to the next year’s audit. It will be here sooner than you think!

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