Finish Audits On Time: 8 Steps for Success
How can you finish audits on time?
If firms cannot complete audits, they cannot bill (at least not entirely)–and this can create cash flow problems for the audit firm. So, we must finish audits on time.
Here are eight steps to enable you to complete audit engagements on time.
1. One-on-one meetings
A manager or partner should meet with the in-charge at least once weekly for 15 to 30 minutes to discuss the audit. Simply ask, “How are things going?” and let them respond. Or “How can I help you?” Some accountability (without micro-managing) helps!
2. Establish trivial misstatement levels early
The audit teams should determine materiality and trivial misstatement on day one. And then, if you’re the engagement partner, communicate to your staff that any amounts less than trivial are not to be pursued. Chasing a $30 difference is not the auditor’s job.
3. Remind staff of materiality
Remind your audit staff that they are auditing within materiality. The audit opinion states that everything is “presented fairly,” not “perfectly,” meaning we use materiality.
Auditors aren’t bookkeepers; they are auditors looking for material misstatements.
And if any problems arise, you need to know about them early.
4. Communicate Problems Early
Ask your staff to tell you about problems early. Identified issues can be dealt with as they occur.
If you’re the engagement partner or in charge, you might tell the staff, “It’s not important,” and they can move on to what is.
Or, if there are issues like fraud, the engagement partner needs to know as soon as possible. The firm may need to amend the initial audit contract to build more time into the engagement.
Another important step in completing audits promptly is the use of project management.
5. Use project management
Build a project management schedule with start and projected ending dates.
Break the project into assignments (e.g., accounts payable—Jimmy Strickland) with estimated time (e.g., 6 hours).
Track the actual time and compare it to the budget. If time dramatically exceeds the budget, see why.
One key to timely finishing audits is using client assistance lists.
6. Monitor Client Assistance List
Send your audit client a list of information needed with due dates—for example, trial balance by August 15, 20X5. When possible, assign the task to client personnel (of course, they have to agree to the assignments).
Using software such as Basecamp can brings transparency to the request and receipt process. Everyone (client personnel and the audit team) can see what was requested, when it was requested, and whether the information has been received.
If you plan to receive confidential client information through your project management software, consider software designed with appropriate security. Suralink is one product that I’ve seen being used.
This list can include several dozen requests, all of which are necessary for the completion of the engagement. So, send the request as early as possible and monitor the receipts of the requested information. As you get closer to the audit deadline, communicate the urgency of receiving the remaining information. State clearly that if certain items are not received, the audit will not be completed by the agreed upon deadline (if there is one).
7. No Stop and Go
I know I’m dreaming, but the best audit is one you start and finish without stopping.
The kiss of death in audit efficiency is starting and stopping too many times. The more you start and stop, the more your audit profitability decreases.
Pulling off jobs in the middle is often a function of office politics. Not good. Two or more partners may want particular staff, but it hurts the overall firm to start and stop too often.
8. Reward Your Staff for Timely Completion
Whatever you applaud increases.
So clap, praise, and stand on your head if you need to. But let your staff know they are appreciated.
A gift card, public recognition in a meeting, or any other outward sign of thanks will pay dividends. You want your folks to know you sincerely appreciate their efforts.
Too many CPA firms do not say, Thank you! It’s important that you do, for your staff and for yourself. Appreciated people tend to remain with firms.
Finish Audits – Summary
Finishing audits on time makes everyone feel better: staff, partners, and clients.
So, do whatever is necessary to finish audits promptly.
Then, you can bill for the engagement and take care of your firm’s cash flow.
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