Financial Audit is a must have requirement If you are running a small-scale to large-scale business, you must understand how daunting is to keep the track record of financial difficulties. And if you have hired someone to maintain fiscal records, it’s even more burdensome as you must keep an eye on their activities and plans.
That’s the reason, small and large businesses tend to shift their focus on financial reporting and reliable audit services, so they can properly concentrate on their finances.
We understand audit preparation is a much stressful job because your complicated business model uniquely offers its own set of multiple challenges regarding financial situations which play a vital role in your business growth.
Let’s discuss some significant steps that can help you perform a successful financial audit.
Create A Plan Beforehand:
First of all, you need to create a financial reporting audit plan and make sure everything has been documented appropriately. Audit planning reduces the audit risk to the minimum level. A person should always be available during audit fieldwork for smooth communication with the audit team. Then your hired team of auditors will supervise the engagement team members and review their work.
Your company should be at the head of the curve, by treating audit preparation as a year-long process. A person can save time at the end of the year by keeping schedules and reconciliation up to date throughout the year. Open line communication must be maintained between the organization and the auditing team during the year instead of waiting for it to be discussed during the auditing process at the end of the fiscal year. This communication will allow the company to make appropriate changes.
After collecting the data based on risk assessment, the auditors develop a plan to test the accuracy of financial statements and internal control environment. Audit planning gives an auditor an insight view of the organization’s business and industry
Keep Yourself Updated About Accounting Standards:
Accounting is a field where laws, rules, and tools keep on changing. To best serve the company, your accountant needs to keep himself up to date to manage or track data in a different way. In order to implement new standards, make sure your accounting person knows everything.
Follow Changes In Company Activities:
For financial audit, you need to be informed about changes in your company activities like launching of a new program, the grant received, a significant change in the control systems and discontinuation of any activity during the year, or any impairments. Any other changes in activities other than those that may affect accounting and reporting should be communicated during the planning process.
Learn From Previous Financial Audit Adjustments:
It’s better to take a round of your previous audit adjustments to happen last year, check out the internal control recommendations, or any special efforts encountered in your previous audit. They can become a good starting point as you won’t repeat the same mistakes twice.
During the planning, meet with the auditors, discuss what went well during last year’s audit and where there may be opportunities for improvement or more effective communication between the organization and the auditors.
Create A Course Of Events And Assign the Task
Review your previous work papers and timetables mentioned by the reviewers, trying to get an explanation of the mentioned data when important. Assign roles and responsibilities to your responsible members and set deadlines.
Tackle the most troublesome, complex, or tedious zones first while planning an audit. Provide the drafts of your financial statements, schedules, work papers or other items requested by your financial reporting experts on the first day of your audit.
Organize The Necessary Details:
Make suitable review plans and schedules that can be even considered for the future. Consider making subfolders for critical financial transactions and classifications, for example, money, income and receivables, costs and payables, speculations, fixed resources, debt, and so on to make it simpler to recovery plans.
Workpapers or other documents with sensitive information, like payroll should always be password-protected or should be kept in a restrictive folder.
Ask For Clarifications:
If something unclear is mentioned by your financial reporting expert, ask for an explanation so that you can avoid significant errors or delays. Auditors usually feel glad to respond to the complicated questions related to audit and financial reporting. Also, it’s better to ask questions about the business or organization to obtain information to prepare footnote disclosures.
After reviewing all the necessary information, in the end, maintain a smooth line of communication with your financial auditors during the fieldwork and delivery of the audit report.
If you have some kinds of open items at the end of your fieldwork, it’s better to decide on the agreed-upon dates for all the details to be provided to your auditors when possible. If your auditor has to attend meetings with the financial department or board of directors then make sure your auditor has a proper date, time and other information about the meeting.
I hope this article helped you and if you’re really in the search of expert and professional accountant in Australia, HH Accountant is there to provide all kinds of accounting and bookkeeping services. Feel free to contact us and hire the best financial audit experts.