Getting ready for an audit is unlikely to be one of your favourite things to do as an organisation. But being prepared, organised and ready can take some of the pain out of an audit.
Planning for your audit helps your auditor get their job done more quickly, and also means there’s minimal disruption to your team and daily business during the process.
Let's take a look at five key ways to be ready for an audit.
Carrying out an audit of your finances is a mandatory requirement for many organisations. If you have an operating expenditure of over $550,000 – your financial statements must be either audited or reviewed by a qualified auditor. For those with over $1.1 million – your financial statements must be audited by a qualified auditor.
Registered charities with total operating expenditure of less than $550,000 aren't required by law to have an audit or review. However, you may be required by your rules (e.g. trust deed, constitution, or charter) or as a condition of receiving a grant to have your financial statements audited or reviewed. These charities may choose who performs the audit; it does not need to be a qualified auditor unless stated in your rules.
See the Charities Commission website for more information on audits for not-for-profit organisations.
So, what can you do to make this process less of a hassle?
In advance of the audit date, be sure to:
Gather all the relevant documentation – this documentation will include financial statements, bank statements, expenses, management information and any other documentation that your auditor is likely to ask you for.
Organise your documentation in a logical way – the whole audit will be far easier to complete if your financial data and documentation is well-organised. Make it simple for the auditors to find what they need, and ensure there’s easy access to all information.
Identify any potential financial issues – the last thing you want is a giant problem coming up in the middle of your audit. So, it’s a good idea to check for any financial issues or irregularities that the auditor may flag up. Doing this well in advance gives you enough time to address any issues and resolve them before the audit begins.
Be prepared to answer questions – it’s likely your auditor will want to ask some probing questions about your organisation and financial records. Make sure you’re up to speed with your accounts and be prepared to answer these questions honestly.
Cooperate with your auditor – the auditor’s job is to ensure that your financial statements are accurate and that your organisation is in compliance with all applicable regulations. This will be much easier todo if you cooperate with them, answer their questions with good grace and quickly provide them with any information they need.
Talk to us about getting audit-ready.
If you’re thinking that your finances might not be quite ‘audit-ready’, you’re definitely not alone. Many organisations are not quite as organised with their financial management as they’d like to be. But don’t worry, help is at hand!
If you’d like some assistance with reviewing the health and organisation of your financial processes, we can help you get in control of your finances. In fact a large part of our business is helping not-for-profits get audit ready.
Get in touch to review your financial management.
"I have had regular monthly coaching with Michelle for two years, I found Michelle kind and thoughtful, also analytical. It is helpful each session to review the numbers, budgeting and discuss forecasting with the different events that are occurring in the trust regularly. Each meeting our discussions resulted in myself as CEO to understand the numbers more and receive helpful tips towards improving our financial reporting to make them more readable and understandable to the board."
