Keeping Your Audit Costs Down

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Keeping Your Audit Costs Down
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• Keeping Your Audit Costs Down
• Presented By
• W. Andrew Powell, CPA
• Principal
• Halt, Buzas Powell, Ltd.

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Introduction

• What does an audit really mean
• Do you need an audit
• Who hires the auditor
• Request for proposal
• Engagement Letter
• Audit timeline
• Auditors information request

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Is an audit required?

• Governmental funding
• Donors
• State charitable registration
• Paid fundraiser
• Board of Directors
• Other types of service
• Compilation
• Review
• Agreed upon procedures
• Program specific services

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What is an Audit

• Process for testing the accuracy and completeness
  of information
• Allows a CPA to issue an opinion
• Includes
• Cover letter signed by the auditor
• Financial statements
• Notes to the financial statements

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Who hires the auditor?

• Staff
• Executive Director
• Audit committee
• Board of Directors

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Request for Proposal

• Information the Organization should include
• Background of the organization
• Services to be performed
• Personnel to contact for more information
• Timing for completion
• Prior financial statements and management letter
• Responses from CPA firms should include
• Experience with not-for-profit organizations
• Experience with related entities
• Staff continuity and turnover experience
• Identify the engagement team
• Audit approach
• Fee
• Standard billing rates
• References
• Differences from competition

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Engagement Letter

• Scope of work
• Timetable
• Estimate of fees
• Process for change in scope of work
• Payment terms
• Assistance to be provided by organization
  personnel

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Audit Timeline

• Schedule interim procedures
• Completion of confirmations
• Develop list of schedules for preparation
• Provide examples of schedules
• Schedule year end fieldwork
• Date for providing drafts
• Financial statements
• Management letter
• Communication with audit committee
• Process for approval of audit

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Auditors information request

• Information usually requested
• Trial balance
• Schedules to support all balance sheet accounts
• Copies of contracts
• Legal representation letters
• Fundraising appeals
• Grant documentation
• Restricted contribution documentation
• Sample of cash receipts and disbursements

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Audit Assistance

• Requested schedules not prepared
• Search for unrecorded liabilities
• Expense accruals
• Amounts released from restriction
• Adjustments
• Organization
• Auditor
• Proposed
• Waived

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Dos and Donts

• Dos
• Engagement letter
• Provide requested schedules in advance
• Receive daily updates on progress
• Provide in writing required date of completion
• Ask what services would be considered above audit
  scope
• Request an exit conference

• Donts
• No engagement letter
• Assemble information day before auditors arrive
• Assume everything is progressing well
• Contact auditor day before board of directors
  meeting
• Accept any bill for services from auditor as
  correct

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Ways to Reduce Audit Costs

• Request a multi-year price quote
• Prepare your own financial statements
• Prepare your own footnotes
• Prepare all audit schedules
• Provide key personnel for questions
• Maintain a file with copies of important
  documents
• Board of director minutes
• Leases
• Notes
• Accounting issues
• Contributions restricted vs. unrestricted
• Organizations policies and procedures
• Adjusting entries
• Functional allocation last step

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• Questions and Answers