May 18, 2016
Ann M. Cole CPA
While the mention of auditors makes most people in business cringe, there are steps businesses can take to make their audit process easier. The first step is to understand what the audit is and how it will be performed. Audits are examinations of the books and records of a company that are made in relation to its financial statements or some other regulatory or legal requirement.
Audits are independent examinations and the auditors will not examine 100 percent of the audit period’s transactions, but will instead examine certain samples from areas that they consider the most material to the financial statements being audited. Audits are conducted in three sections: the planning phase, the fieldwork phase and the reporting phase. This article will discuss the planning phase of the audit.
It is best to be the most proactive with your auditors during the planning stage. If not immediately provided to you, ask the auditors for a needs list or a prepared by client (PBC) list so the business can get started on gathering information as soon as possible. The PBC list provides you with a list of items the auditors will require to perform their work.
Be sure the auditors give you any items that the business will need to complete so they are ready by scheduled fieldwork, i.e., internal control or other questionnaires. The auditors will be corresponding with your business via email or telephone at this point in the audit and will be setting up the time for when they will be arriving on-site to perform fieldwork.
For the highest level of efficient performance it is helpful to have all the PBC items ready when the auditor arrives on site. It is essential to let the auditors know if the items on the PBC list are not ready by the time they are scheduled to conduct fieldwork. If this occurs, it may be best to reschedule the site visit rather than have the auditors arrive when only part of the PBC information ready. During this initial phase it is important to discuss the flow of work and how the final report is to be completed.