If your organisation is going to undergo its first audit, chances are, you are apprehensive about it. For some organisations, the mere thought of an audit creates anxiety and panic. Of course, there is no need to panic about it – given you are an organisation prepared for it.
The fact being, an audit checks up and zeroes in on the company’s compliance and financial performance. Typically, auditors examine a firm’s financial records, so you need to keep them error-free.
Preparations you should make
Here are some first-hand preparations that you should make in order to free up and turn the audit process hassle-free.
- Appoint an Audit Manager
- Understand the Auditing and Accounting Standards
- Maintain proper Documentation
- Exit Interview
- Audit Report
These tips are specifically for an external audit, but they may also be used as a guide to preparing for an internal audit.
1. Appoint an Audit Manager
- Appoint an audit liaison within your organisation who will act as the main contact of the external auditor or team.
- Send a general message to the faculty stating that if the auditor contacts them directly, they should notify the liaison.
- Have the liaison maintain a list of contacts that should be notified of the audit services.
- Contact the auditor and set up entrance conferences to clarify the purpose of the audit.
2. Understanding the Audit Standards
Every audit is different based on the standards that you are being audited for. Know the requirements and scope of the audit so that you can adequately prepare for such an audit. Typically, an external auditor examines the financial statements and does the accounting system analysis of the company.
Other types of audit, however, may also look into specific departments during an external audit. For instance, an external audit focusing on the IT department will audit the records of such a department.
3. Maintain proper Documentation
- Obtain the list of required records from the auditor and pull those records from various departments
- Review the records prior to their submission to the auditor. Anticipate the issues the records may provoke.
- Verify the facts on which the issues are based and discuss the same with the auditor.
- Liaison must attend the meetings, both with the faculty and the auditor, unless the faculty or auditor insists.
- Set up an exit interview
4. Exit Interview
- Get a copy of the draft report or each finding prior to the interview
- Agree on valid findings, take advice and suggest a few measures to the auditor to remove weaknesses from the management
- Discuss the disposition of the audit issue with the auditor.
- Escalate any issues disputed with the supervisors.
5. Audit Report
- Get the final report from the auditor for review
- Draft responses from management and circulate management for approval
- Understand the follow-up process after you get the audit report.
- Perform a post-audit evaluation in order to determine weaknesses in the process and potential changes in the future approach.
Prior to the audit, the same process owners and subject matter experts should help you to make sure that all necessary controls have complied and that you implement the standards set by the audit firm. Perform appropriate analysis and checks to identify gaps in your operational processes and prepare for everything that will be asked for by the auditors, such as policy documentation, financial statements, and other pertinent documents.