Audits have a stigma that leads people to believe that audits (and the auditors) are only a requirement to check off the annual business cycle. Hopefully, you have a great relationship with your auditor that allows the audit process to go smoothly. Once the financial statements have been released, the audit submitted to the State, and the Board or Council presentation completed, you’re ready to kick those auditors to the curb and tackle the next priority. We can hardly blame you! However, auditors have much more potential than just completing the annual audit that you could harness to benefit your organization year round.
Risk-Based Auditing
First, our audit teams take a risk-based approach to developing and customizing each client’s audit. What does that mean? We gather historical and current information about the organization, interview employees, members of management and members of the Board or Council, and then use that information to brainstorm possible ways things could go wrong in your organization. After our brainstorming session, the customized audit plan is developed accordingly. The audit plan can incorporate areas where the organization could benefit from further efficiency, or areas where management or the Board or Council has additional concerns. Here are some examples:
- If the organization routinely has issues with getting all employees to timely submit credit card receipts, we can focus attention to this area. Our testing will likely result in a recommendation that provides management with leverage for initiating change. If management can say the auditors are looking at an area, employees are more likely to comply.
- If bank accounts aren’t being reconciled as timely throughout the year as the manager would like, he/she can ask the auditor to review the reconciliation completion dates without having to be the bad guy.
These and many other areas of organizations can be improved by being an active participant in your audit.
Institutional Knowledge
Second, auditors have a significant amount of institutional knowledge. Many of my clients have been with me more than five years and I know their organization well, maybe better than most within their organization. When moving into the future, take advantage of that historical knowledge. Auditors can help with long-term analysis, in some cases projections of where the organization is heading, and can help your organization avoid taking a path that was already traveled which resulted in a less than desirable outcome. Helping the organization move in the right direction makes everyone feel like a winner.
Credibility
Another area in which auditors can be used is to gain creditability. For example, when there are new members of management or new members of the Finance Committee, those new members are trying to get up to speed, and in some cases challenge the establishment while having little to no history of the organization. Auditors can explain the hurdles that were faced, describe how the organization has grown and dealt with issues in the past, and work to support the qualifications and work of members of management. In some cases, we have even provided Board or Council training related to financial statements or internal controls. Auditors are generally well respected and knowledgeable; use that to your advantage.
Interim Help
Lastly, when an organization experiences turnover in management and staff, or there are large projects that no one has time to complete, your auditor might be the answer. As previously mentioned, in many cases auditors know your organization and internal controls better than most in your organization. With that knowledge, auditors can help you design controls to cover the organization in the interim and can even do certain types of projects that don’t include management functions. Sometimes this can keep the organization from falling woefully behind while they look to replace lost team members, or help move projects off of the to-do list and keep the organization moving forward.
These ideas are just the tip of the iceberg. The main point is that we are your auditors all year long, not just at the time of the audit. We want to hear from our clients and are always willing to go the extra mile to help out when we can.