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Blog > What to ask in the lead-up to your annual audit

What to ask in the lead-up to your annual audit

affiché le 19 nov 2018
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by Maria Lahiffe

Hands up everyone who looks forward to your annual audit.

Anyone?

Never forget that auditors actually want the same thing as the rest of us: evidence of an organization whose finances are being stewarded responsibly. This evidence will help you, and your funders, rest easy knowing that your mandate is being filled in the most financially efficient way possible. And if there is room for improvement, then you need to know that, in order to make those improvements.

Here are some things you can do to make the process flow more smoothly.

Do it face-to-face

Meet with your auditor in person. This will allow you both to establish some comfort with each other, and avoid boilerplate communication. At a minimum, you should have two meetings: one ahead of the audit, and a second debrief meeting afterward, to review the findings and make a plan for the upcoming year. You may also need to meet while the audit is ongoing, if there are any questions.

Form an audit committee

It is recommended to form an audit committee. This is a task force (temporary) or standing committee (permanent) which is given the authority to provide accountability for the organization’s audit. The board retains responsibility and authority for oversight, but the committee, being smaller, can work more effectively. [1]

The audit committee can also provide oversight through the year, to make sure that the auditor’s recommendations are implemented throughout the year, and may also serve as an ombudsperson if anyone has concerns about financial mismanagement in the organization.

It is not necessary to form a specific audit committee. In some organizations, this role can be taken on by the executive committee. It is important, however, that this function be filled.

What to ask of your auditor

Here are some suggested questions to ask ahead of your audit: [2]

  1. Has the scope of the audit changed from last year and, if so, in what areas and why?
  2. What industry and business-specific risks have you identified that affect our company’s financial reporting?
  3. What high-risk audit issues have you identified and what is your planned audit approach for these issues?
  4. Where do you see our most significant areas of fraud risk residing in our operations and how will your audit address these issues?
  5. How will the auditor evaluate the company’s risk management processes related to financial reporting?
  6. Will you be collaborating with our internal auditors in order to better understand our risk and operating environments? If so, how?
  7. Where does our company have significant tax exposure and what resources does your firm have to assist us in their evaluation? This can be of additional relevance where international operations apply.
  8. With respect to international operations: how do the customs, business practices and governance issues differ from the local environment and how will these risks be mitigating during the audit? How do you maintain audit quality and service where you’re relying on a component auditor?
  9. Would you characterize our company’s accounting policies as aggressive or conservative in comparison to our industry peers?
  10. How do our information technology (IT) system controls rate in comparison to our peers and in reference to our specific financial reporting issues? What IT-related risks have you identified and how will these be addressed during the audit?

What next?

To learn more about how to prepare for a successful audit, come to our upcoming workshop.

Click here to register Wednesday, November 13, 2019. 9:00 a.m. to 12:00 p.m.

Volunteer Ottawa offers a comprehensive suite of courses related to all aspects of running a non-profit or a charity. Click here for our event calendar. Subscribe to our Event RSS Feed to be among the first to know when a new workshop is added to the schedule.

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Related blog posts:

[1] "Board's Role & Audit Committees," National Council of Non-Profits, [Online]. Available: https://www.councilofnonprofits.org/nonprofit-audit-guide/board-role-audit-committee. [Accessed 15 November 2018]. [2] B. Kydd, "10 Essential Questions you Should Ask your Auditor," 28 July 2015. [Online]. Available: https://www.bdo.ca/getattachment/cfe83f3e-160e-4d12-8c72-575462ecee99/attachment.aspx. [Accessed 14 November 2018].
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