Author: Neil Conway
Let’s face it. Going through an audit ranks somewhere between a flight delay at Chicago O’Hare and a root canal. Even a well prepared bookkeeper seeks to minimize time spent on an audit process.
Let’s go through five ways to reduce time spent during an audit on this critical task:
- As soon as you can, create or encourage your supervisor to create a set of policies and procedures. I promise it will save you time! The auditors look for this kind of thing when they audit. They adapt their audit to your “risk level”. If you have no policies and procedures, you are higher risk and get a longer audit. Important point: you do need to follow these policies and procedures to make this worth it.
- Document following those procedures. The auditor needs some sort of proof that you are using solid internal controls. A key procedure might be a signature of a supervisor on your bank reconciliation report.
- Make sure source data is easily available. An auditor likes to see a copy of the bank statement and a copy of the general ledger with a balance that ties to your bank reconciliation.
- Look for poorly named outstanding items such as “Check XX”. Find out their true identity and rename them.
- Look for outstanding items more than (typically) 90 days old. Either begin the process to escheat them (if you work for a government) or document a process to write them off. This may involve sending letters to intended recipients.
Taking care of those five steps will put you on a path towards and cleaner and hopefully quicker audit.