Keeping Your Audit Costs Down
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Transcript of Keeping Your Audit Costs Down
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Keeping Your Audit Costs Down
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Keeping Your Audit Costs DownPresented By: W. Andrew Powell, CPAPrincipal Halt, Buzas & Powell, Ltd.
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What does an audit really meanDo you need an auditWho hires the auditorRequest for proposalEngagement LetterAudit timelineAuditor’s information request
Introduction
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Governmental funding Donors State charitable registration Paid fundraiser Board of Directors
Other types of service◦Compilation◦Review◦Agreed upon procedures◦Program specific services
Is an audit required?
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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
What is an Audit?
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StaffExecutive DirectorAudit committeeBoard of Directors
Who hires the auditor?
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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
Request for Proposal
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Scope of work Timetable Estimate of fees Process for change in scope of workPayment termsAssistance to be provided by
organization personnel
Engagement Letter
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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
Audit Timeline
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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
Auditor’s information request
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Requested schedules not prepared Search for unrecorded liabilities Expense accruals Amounts released from restriction Adjustments◦Organization◦Auditor Proposed Waived
Audit Assistance
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Do’s◦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
Do’s and Don’ts Don’ts◦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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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 Organization’s policies and procedures Adjusting entries Functional allocation – last step
Ways to Reduce Audit Costs
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Questions