Blog Post - Your Guide to a Successful Financial Audit

Financial audits: the bane of every business professional. But as you know, simply approaching the topic the right way, and with the right degree of preparation, will make the process much less painful.

In general, there are three common problems that depict a negative audit experience: poor audit preparation, inflexibility and poor communication, and wasted time. If not taken seriously, the planning stage can make the rest of the audit process chaotic and time-consuming, as you rush to find and prepare documents that should already be on hand. Cooperation is central to a strong audit performance — not simply between your employees and departments, however, but between your company and your auditors as well. Responding quickly and clearly to requests for documents, information, and other queries will help expedite the entire audit process. One common side effect of poor planning is wasted time. If you haven’t clearly researched your previous audits and the relevant accounting standards, you might end up spending time preparing documents and statements that your auditor ultimately won’t request.

Getting ready for an audit is critical if you want the experience to be as stress-free as possible — but it’s also important for ensuring a successful audit that leaves your company with a clean bill of financial health. Following these steps will help you achieve both of these vital outcomes.

1. Plan ahead and get your documents organized: Make sure your records are well-kept throughout the business year to ensure the auditing process is as smooth as possible. Reconcile all accounts before compiling your documents — that means collecting any remaining invoices and paying bills and employee expenses that might have been held over. From there, it’s time to get your documents in order. This is the most important step in preparing for an audit. If done well, it can ensure a quick, precise, and stress-free audit.

2. Create a timeline and assign tasks: You should have a solid understanding of what evidence and documents your auditors will need, and when they’d like to see them by. Plan a team meeting to draw up a timeline that will allow you to deliver all the necessary documents in a regular and timely fashion. From there, you’ll want to take the timeline and assign each item to an individual, who will then break down the task into smaller items. You’ll want to develop an internal timeline as well, to make sure you can meet the auditor’s deadlines. A good rule of thumb is to tackle the most difficult tasks first.

3. Make yourself available, and ask questions: During fieldwork, it’s critical to make yourself as available as possible to the auditor. For the most part, the auditor will have what they need in terms of documents and paperwork, but it’s highly likely they’ll continue asking questions and requesting new information throughout the process of fieldwork.

Don’t be afraid to ask for clarification if you’re unsure about specific items your auditor may be requesting — if you feel like you have a greater understanding of what documents might be helpful for the auditor, you should also feel free to make recommendations, if and when it seems appropriate.

Ultimately, this isn’t a venture you have to handle alone! With a combine 50 years of experience, our motto is to be, “The Partner you can Count on.” Whether you need tax advice, help with preparation, or how to get the max refund- 3 Pillars Bookkeeping will help you stay out of trouble with the IRS.

Alex Bulmer - Three Pillars Bookkeeping and Business Services
763-464-6408, Office@threepillarsbusinessservices.com

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