Whether you’re a business owner, a member of management, or an employee, you probably aren’t looking forward to being audited. Being prepared for the annual audit will take the trouble out of the experience. Make your auditor’s job easier—and your end of the process much smoother—by properly preparing for all aspects your yearly audit.
Talk to your auditor.
Audits exist to eliminate financial and operational risk; minimize the risk even further by meeting with your auditor beforehand. Keep an open line of communication throughout the year. Notify your auditor about changes in accounting practices and important deadlines, then keep a record of your meetings. You’ll also want to discuss changes in personnel, management, and technology. At the end of the year, you’ll schedule your audit and receive a checklist to help prepare you for the upcoming audit.
This is the easiest way to prevent an auditing catastrophe. Communication is key: come to your auditor with accounting questions throughout the year, not just during the audit, and keep them informed. With your auditor in the loop, surprises will be kept to a minimum.
Organize your records.
You don’t want to wait until the last minute here. If you’ve been in regular contact with your auditor, you should have an idea of the documents they’ll want to see during the audit. Although there may be particular records that the auditor requests on the spot, there are certain documents that you can prepare ahead of time with certainty.
For example, you should have schedules detailing liabilities, expenses, and contributions on hand. In addition to an audit checklist, your auditor may provide you with a packet with further information. Ask your auditor if they prefer physical or electronic of your records. Regardless of the format of the documents, they need to be presented in an easy-to-navigate manner. If your auditor is fine with electronic copies, organize the files in clearly labeled folders. Hard copies of your documents should be kept in a neat binder
Operate as if you’re being audited every day.
What’s the best way to ensure a smooth and painless audit? Act like you’re preparing for an audit every day. Like any unpleasant chore, grin and bear it. Create a schedule and stick to it; check your monthly ledger every month to ensure the accuracy of your reports. Get in the monthly habit of making sure you’re accurately keeping track of your finances so the auditor won’t have to.
