TIP: Keep your auditor informed of any business concerns you may have—often an auditor can act in a consultative capacity and provide tangible feedback to your concerns without impairing independence. It is always important to remember that some decisions cannot be “undone.”
Be Proactive and Prepared Two of the most common inefficiencies experienced by auditors arise from poor communication and delayed receipt of requested documentation for the audit. Providing the following items to your auditor well in advance of any scheduled fieldwork will allow your auditor to effectively and efficiently plan the audit engagement:
+ An agreed-upon timeline of critical dates (e.g. the dates that (1) the books will be ready for audit and (2) schedules prepared);
+ Detailed documentation of your internal controls, accounting processes, and IT systems;
+ Completed legal, cash, receivable, and notes payable confirmations; and
+ Copies of your major agreements, such as debt, ownership, customer and service provider agreements, occupancy and equipment leases.
It is generally helpful to have a planning meeting with your auditors to discuss the above and other matters. It is also important to understand your auditor will probably be spending most of his time on inherently risky or complex areas, so you should discuss any concerns you have so that they can be addressed. By discussing such matters in advance of fieldwork, you may be able to avoid surprises later on in the process.
TIP: It is worthwhile to have a knowledgeable employee (or outside consultant if you do not have a Controller or Chief Financial Officer) complete various checklists and/or schedules to minimize inefficiencies resulting from poorly prepared schedules, or accounts not being reconciled to subsidiary records (two major drivers of audit costs).
Respond Timely
How many times have you picked up your favorite book only to be interrupted? You may have noticed that each time you revisit your book you must refresh and reread a few more pages just to get back to where you left off. In the same way, interruptions and delays in the audit schedule tend to eat up more billable hours due to lost time circling back on issues and open areas. Avoid this costly inefficiency with a timely response to audit inquiries and information requests and stick to the established schedules.
TIP: Hold yourself and your auditor accountable for sticking to the schedule. Insist on periodic meetings throughout the process to go over audit status, budgets, expected fees and timing of report issuance.
Audit Timing Audit firms are becoming more and more seasonal and demanding higher rates during their peak times. So if you are one of the lucky ones that do not have to contend
with filing dates necessitated by public reporting or debt covenants, you might receive significant discounts by having the audit performed during the auditors’ non-peak times. Similarly, auditors are sometimes willing to discount rates if you allow them to perform significant interim work during these non-peak times. But, as always, you should be aware communication will be even more important to minimize the possibility of duplicative work.
Negotiate Judiciously Inefficiencies resulting from delays on your part may lead to an increase in audit fees. Conversely, companies that are proactive, prepared and responsive to their auditors are better positioned to request lower fees in the future. When negotiating for savings with your auditor, be equipped with support for efficiencies you created during the audit and request that your auditor provide details of any inefficiencies and cost overruns so that you can ensure your request is suitable for the circumstances.
A Final Thought
Whether your financial statement audit is required or simply desired, the fees charged by your auditor are generally a function of complexity, time and rate. Communicating expectations, keeping things on schedule and avoiding surprises will put your company in the best position to negotiate fees and keep costs low. Doing so will ensure your company is making every dollar count.
DOES YOUR CURRENT ACCOUNTING FIRM MAKE YOU FEEL OUT OF PLACE?
Does your audit schedule and delivery timeline constantly change?
Are partners/managers available and re-sponsive to your concerns?
Does your audit firm keep you abreast of new rules and regulations? If not, Kingery & Crouse is the RIGHT Accounting Firm for your business. We are here for you and your business.
2801 West Busch Boulevard Suite 200 Tampa Florida 33618
tampacpa.com |
info@tampacpa.com 813.874.1280
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