5 Tips to Get You A Clean Audit Every Year
Does the start of audit season fill you with a combination of dread and panic? When your auditor comes for a site visit are you nervous or stressed? Deep down, when it feels like this each and every year, do you say to yourself: there must be a better way?!
In theory, an audit is actually an AMAZING tool. (Yes, really.) Audits help management and external stakeholders (like investors and donors) to understand:
Your company’s efficiency, effectiveness, and resilience
How your company stacks up vis-à-vis compliance and regulatory standards
Whether or not you are adhering to standard policies and procedures for your industry
Ultimately, a clean audit can enhance your organization’s reputation in the community. That’s the goal anyway. Unfortunately for auditors, though, no one loves an audit. An audit is seen as a tedious, often painstaking process. Some nonprofits get audits every year just because it’s mandated by their nonprofit bylaws. It can feel like a mess of wasted time and money. But it doesn’t have to be that way.
Here are 5 tips to help you thrive during audit season and get a clean audit! (And we feel pretty good about these because our clients get clean audits every year.)
1. Identify the cause of your audit stress
We all internalize judgment and critique of our work in different ways. Whether it’s something as trivial as a Google review or as serious as an audit, there’s no getting around it: when a 3rd party delivers an opinion about your work it can be uncomfortable, especially if it’s not a good one. But if you can figure out the major causes of discomfort, you can work to resolve them for yourself in advance. Studies show that the simple act of naming the causes of stress or anxiety actually lowers stress levels all by itself. So figure out what it is that freaks you out about your audit, examine it, and start to consider how you can resolve it in the future.
2. Stay as organized as possible throughout the year
Organization and preparation are key to a clean audit. If your desk looks like a tornado and your file cabinets are a mess, yes, of course audits will be a challenge. But basic, common sense record-keeping is essentially the foundation of a clean audit. These days, virtual financial record-keeping is easier than ever. With apps like QuickBooks Online and Bill.com, your office can even become paperless when it comes to accounting records. Ask us if you’d like a recommendation on the tools that’ll work best for you.
3. Be transparent
Kudos to auditors everywhere: they can smell BS a mile away. We’re not kidding. It’s like their superpower. So listen up: you’re a good person. Your auditor is a good person. (Probably. Deep down anyway.) Don’t make them sniff out something you did wrong. If you goofed, or your staff goofed, just be up front about it. If you know something is amiss, chances are so will they. It will feel better to own it than to try to escape it. So turn it into a learning moment: “Look, Audrey the Auditor, I think we messed up our accounting for this event. I wanted to let you know in advance and ask if you have any advice or suggestions so that it doesn’t happen again.” Transparency and honesty are essential to a clean audit, and a good relationship with your auditor.
4. Follow up with your auditor for more feedback
So, you pay your auditor a boatload of money each year and they spit out this report that your board reviews for, say, 10 minutes. Is that a win? Not in our book. So how about leveraging the knowledge and wisdom locked up deep inside Audrey the Auditor? Why not ask her questions, both in the middle of the audit and after it’s done? Good questions might be:
Are we doing XYZ correctly, or would you prefer to see the information another way next year?
What policies and procedures are we missing? What’s best practice for our industry?
What else can I do to prepare financials that meet the current standard?
The auditor will be THRILLED that you asked and that you care, and will probably give you some mental bonus points just for taking such initiative. And questions will spark dialogue between you and the audit team, ensuring that you get the most bang for your buck all the way around.
5. Ask for help
If you feel like you could use some extra help with your nonprofit accounting workflow, or that you just can’t get organized for your annual audit without help, it might be time to begin outsourcing some of your financial functions. Ask your auditor what they think about that. Or just call us and talk it over. We won’t pitch you; we’re here to be a resource. So reach out at any time.
A clean audit is possible. We see it all the time! Contact us if you want help preparing for your next audit. We’re here for you!
Author: Founder & CEO, the Original Blue Fox, Chantal Sheehan, MS, CFP(r)
Company Info: Our team at Blue Fox provides customized, boutique financial and back office services for social impact organizations. Services range from standard bookkeeping and payroll services, to coaching and consulting, to full-blown virtual CFO services. Our mission is to disrupt the traditional accounting model through technology, innovation, and a radically client-focused approach that truly empowers nonprofits and social enterprises. For more information call (321) 233-3311, email hello@yourbluefox.com, and visit www.YourBlueFox.com.
