by Maria Lahiffe
Do you dread your annual audit? You’re not unusual. However, your annual audit is actually really valuable. It is the only tool of its kind which ensures your financial procedures are in order, which can give you, your board, and your funders confidence in the strength of your financial systems. Your auditor can be an invaluable resource in building that strength in your systems. Here are some ways you can ensure a smooth audit.
If something unusual comes up during the year, or you are about to post a new type of transaction, call your auditor. She can tell you the correct way to treat the transaction right when it happens instead of making your correct it months later, after you’ve probably forgotten all about it. Another thing your auditor can help with is contacting federal, provincial, and municipal tax professionals, to analyze the potential implications of your proposed transaction before it’s too late to change anything.
Make sure every donation and every expense is accompanied by appropriate documentation, such as original store receipts. Also, if you do end up posting an unusual transaction, keep documentation of the decision-making behind the transaction, so you can remind yourself of your thinking process come audit time. If you keep all of your records in Excel, a handy trick can be to scan and save all receipts, then hyperlink each number in Excel to the relevant file on your drive.
I get it, reconciliation can be about as much fun as getting a root canal. But wait, that could be because you leave it until the last minute to do it! Reconciling monthly allows you to identify issues and resolve them while the people involved can still remember what they were doing and why. So keep on top of it and you’ll find it is a whole lot more satisfying.
Your auditor wants the same thing you do – evidence of a company whose finances are being stewarded responsibly. She will let you know what information she will need to see, in order to compile that evidence. It’s called the “Prepared-by-Client” listing, and I strongly recommend you ask for it ahead of time. Also, tell your auditor about how the year went, and about any transactions or issues which differed from the norm. She may need additional, specific evidence, which she can spell out for you at the pre-meeting, in time for you to have it ready for the audit.
Use the same numbering system in your reporting as in the Prepared-by-Client listing. That will ensure that your auditor can find everything faster. It also gives you a sense of how prepared you are for the audit. If you’re missing number 2 on the list, its absence will be obvious. Doing this early will ensure you have time to get everything in order before the auditor comes.
Annual financial audits are an important facet of running any organization. They help you and your community to be confident that your organization is well-run and worth continued support. To learn more about how to prepare for this essential function, come to our upcoming Professional Development Seminar.
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