For those of you willing to be proactive and ready to take the challenge to your auditors by yourself and let them know that you are ready for the audit, there is of course what I call Audit Prep Academy.
The first time I come in I will:
- Sit down with you and review your latest trial balance together.
- Check your bank reconciliations against your latest trial balance.
- Check your latest property tax reconciliations against your latest trial balance.
- Check for balances that appear to be unusually high or low.
In the first year, I will work closely with you as we approach fiscal year end preferably beginning February (for June 30 year ends) or can be structured as appropriate. I will come in and assist you to ensure that your:
- Trial balance is updated on a timely basis.
- Property tax revenue accounts are reconciling to your tax collector reports.
- Subsidy accounts reconcile to your year to date remittances.
- Prior year reversals are complete.
- Capital assets activities are tracked properly.
- Bank statements are reconciled in a timely basis.
- Grant expenditures are properly tracked.
At year end you are 75 percent almost ready for the audit. All you need to be concerned about is your accruals for accounts payable and accounts receivable and preparing your financial statements and capital asset schedules for financial statement purposes and other related schedules. We will work together to prepare your fund level financial statements and entity wide level statements and other reports as needed.
After fiscal year end we will work together to ensure that you have properly accrued for payroll and accounts payable expenditures and also revenue accruals.
Implementing this process will allow your government to keep its financial records up to date on a timely basis. Your Business Office will also be able to prepare in house for the audit without much external help from consultants like myself. Also, note that your involvement in this process will help keep my time to a minimum. This way, you can easily start managing your audit costs.
The success of this process will depend highly on whether you can maintain this process throughout the year and not just at fiscal year end. The process will get better over time through continuous implementation of these practices. The individual taking on this responsibility should expect to get better at this process over time and not expect to be perfect after one year.
