As a governmental entity, preparing for an audit is a year-round process with several components, making it a challenging task for some. Understanding the contributing factors and timeline of an audit can help ensure you complete yours on time and accurately. 

Follow these tips below to get ahead of your next audit engagement:

• Keep a list of the changes in processes, procedures and employees that occurred throughout the year.
• Don't wait until the audit to reach out to your auditor. Keep them updated as significant events arise, including complex or unusual transactions and operational changes.
• Ensure timely reconciliations, journal entry approvals and supporting documentation for all financial activity is kept on file and easily accessible.
• For grants, ensure you understand the reporting requirements, allowable uses, and timeline for use of funds. This includes tracking activity, reading the grant contract carefully, and no double dipping.
• A single audit is required if an organization expends $750,000 or more in federal funds in a fiscal year. This includes additional compliance testing and internal control testing.

When it is time to start your audit, discuss a timeline with your auditor that includes due dates and reporting requirements. You should also work together to schedule draft meetings and presentation meetings. Be sure to set goals and expectations for you and your staff, as well as establish a secure and effective method to share information and access to files.

Here are some questions you might ask your auditor and ways to utilize your audit as a tool for your organization:

• How can your organization improve? What are the best practices for internal controls and procedures? Previous audit results can be useful, including findings/internal control deficiencies and proposed journal entries. Be sure that your Board and auditor are addressing any “hot topic” items.
• What education and training should your board members, management, and staff be partaking in?
• How can we best make a financial plan for the future? Consider putting together a cash flow analysis that includes trends, future planning, and an analysis of operations, by department.

Preparing for an audit requires careful planning and attention to detail. By following these tips, you can navigate the audit process successfully and ensure accurate financial reporting for your organization.