Preparing for Government Audits: 5 Best Practices
Is your government agency adequately prepared for an audit?
Undergoing an audit can be a stressful time for any government agency because of the volume and complexity of requests, the availability (or lack thereof) of personnel to fulfill auditor requests, and a multitude of other challenges, including maintaining the ongoing financial management operations. Taking some preliminary steps and adequately preparing prior to the arrival of the auditors, can help make the audit process more efficient and less challenging. Below are five best practices that can be adopted to alleviate stress, save time, and improve the efficiency of the audit.
- Review Prior Year Audit Results – Review findings and recommendations from the prior year to ensure that your agency has implemented corrective actions to address these items. This review should incorporate all agency-wide reports like examinations, reviews and performance audits plus results from Performance and Accountability reports (PARs) and Agency Financial reports (AFR’s). If any of the prior year audit findings and recommendations have not been completed, begin drafting and implementing a Corrective Action Plan immediately.
- Review Prior Year PBC List and Requests for Audits – A review of the prior year’s Prepared by Client (PBC) list (i.e. the auditor requests) is helpful to refamiliarize yourself with the nature of items requested. Many items will be requested year-after-year, with updates as appropriate. Additionally, a review of the prior year’s list of audits requested by management helpful to familiarize yourself with the nature of audits that will be performed.
- Identify your Audit Liaison – Identification of one individual responsible for coordination with the auditors can be extremely beneficial. With a full view of the audit requests, the liaison helps efficiently delegate responsibilities to those best suited to respond, eliminates duplications of effort, ensures the accuracy of documentation being provided, and reduces miscommunication between all parties. Using an audit liaison will help your agency keep track of audit requests and keep the audit moving along smoothly.
- Electronic Submission of Documentation – Provide as much documentation as possible in electronic format to your Auditors. Your Auditors will have secure transfer protocols in place to protect the data and can attain significant efficiencies when documentation is available electronically. Manipulable formats such as excel (.xls & .xlsx), word (.doc & .docx), and comma separated values (.csv) files are preferable to other electronic formats like Adobe (.pdf) or picture (.jpeg, .png, etc.) files as it maintains the highest levels of readability, text recognition, and data analysis usability for your Auditors.
- Review the Prior Year Annual Statement of Assurance – A review of the prior year Annual Statement of Assurance document should be performed to ensure that the material weaknesses identified in the prior year can be properly mitigated in the coming year’s audit.
Although there are many strategies that can be implemented to prepare for audits, the above best practices are some of the easiest and most efficient ways to ensure that your agency and personnel will be minimally affected in the event of an audit.
For more information on how to prepare for your auditors, or to let us know if this article was helpful to you, please contact:
Nathaniel Turner, PMP, CICA
Government and Public Sector