Controlling Audit Costs
Audits are expensive. Whether you see them as a useful service or necessary evil, they still take up a lot of staff time and financial resources. Obviously the more prepared the charity staff is, the lower the cost will be, but the auditor also has a responsibility to keep their costs down. September is often when audit planning begins, so here are some tips to help you keep the audit on track:
- Auditor Preparedness – Charities have specialized accounting rules. Even within the not for profit sector, government funded charities can have different requirements than foundations, for example. Before the audit starts, ask if the team has experience with similar organizations. Then decide in advance what to do if the charity staff finds themselves having to explain basic accounting to the audit staff.
- Scheduling – The date the audited financial statements will be released is usually discussed in planning sessions, but the smaller deadlines or milestones leading up to that date can be missed. The audit plan may call for a specific number of weeks for field work, but unless the work is tied back to the number of staff and the budgeted hours for the individual audit steps, it is difficult to know whether enough time has been scheduled. Ask for a schedule showing when the detailed areas (e.g. banking, capital assets, donation revenue, human resources and expense analysis) are scheduled, then agree when you and the senior field auditor will monitor progress. This information will also help you schedule the charity’s staff.
- Field Work – After they have finished your audit, the audit team is typically scheduled to go to another client. If the field work is incomplete at that time, the audit can turn into an expensive game of email tag. Even if the audit tests are complete, the format of the financial statements and the wording of the notes can take a lot of unscheduled time. These steps need to be built into the plan and the progress meetings, with the goal of having draft financial statements by the end of the scheduled time (whether onsite or back at the office).
- Auditors Are People Too – The audit team may know their accounting, but have little experience running a project. They may feel uncomfortable asking for help. They may get so involved in one area that they lose track of other work. And they may be short staffed or overloaded with other client work. Sometimes just asking, “Is there something I can help you with?” will break the log jam and keep the audit moving.
Finally, the audit will progress more smoothly if everyone takes responsibility for issuing accurate, objectively verifiable financial statements. After all, they are your statements, not the auditors’.
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