6 Steps Municipalities Can Take to Ensure a Smooth Audit Process
Maximizing Efficiency: A Guide to Preparing Your Municipality for an Audit
Municipalities are tasked with the responsibility of managing the public’s funds, and as such, an audit of their financial records is an important part of their annual operations. An audit can be a stressful experience for municipalities, especially if they are unprepared. To ensure a successful audit and avoid potential issues, municipalities should take several steps to prepare.
- Financial Records are Up to Date: First and foremost, municipalities should ensure that all financial records are up to date and accurate. This means making sure all transactions are correctly recorded and all accounts are reconciled.
- Auditor Relationship: Municipalities should also work to establish a good relationship with their auditing firm before the audit begins. It is important to be open and transparent with the auditors and answer any questions they may have. Keeping the lines of communication open will help ensure all involved are on the same page throughout the engagement.
- Understand the Audit Process: Confirm that all stakeholders know the audit process and what is expected of them. This includes understanding the scope of the audit (what will be covered), the timeline and who is involved. Knowing this information beforehand can help ensure the audit runs smoothly and efficiently.
- Gather All Necessary Documentation: Before the audit begins, verify all financial documents and other pertinent information are readily available. This includes bank statements, invoices, contracts, payroll tax returns and other records. Having these documents organized and easily accessible will make the audit process less burdensome.
- Review Internal Controls: It is crucial to document and review internal controls and procedures before the audit begins. This includes verifying policies and practices are up-to-date and in compliance with applicable laws and regulations. This will help the auditors gain a better understanding of how financial transactions are handled and recorded within the municipality’s accounting system.
- Prepare for Questions: During the audit, the auditors may ask questions about the municipality’s finances and operations. If auditors are scheduled to be onsite at the municipality for fieldwork, it is imperative that municipal employees knowledgeable and involved in the finance and accounting functions be present and available to assist with these questions. Being available will allow the audit work to be completed in a timely manner.
Municipal audits can be complex and daunting undertakings. By taking these steps, municipalities can ensure that their audit goes as smoothly as possible. The key is to be prepared and organized before the audit begins so that any issues or problems can be identified and addressed quickly and efficiently. With the proper preparation, municipalities can ensure that their audit is successful and that the public’s funds are managed responsibly. Contact an Adams Brown advisor to learn more.