Financial Statement Audit: Preparation is Key

Year-end is quickly approaching, which means that the annual financial statement audit is also on the horizon. Hopefully, most institutions have had ongoing discussions (throughout the year) with their accounting firms, relative to transactions or issues that may be of significance to the audit.

Following are a couple of quick tips that lend efficiency to the audit process, and potentially, keep the associated audit fees as low as possible:

Audit Preparation Tips for Banks

1) Request that your accounting firm provide you with a client request list early – All audits will likely start with a list of requests that are to be prepared or provided by management. The earlier this request list is obtained, the more time there is for it to be delegated to the appropriate individuals at the institution.

The institution should also consider assigning one employee as a “point person” to gather the requests from the various institution departments, organize them in accordance with the request list, and send them to the accounting firm. The more items on the list that are provided up front, the less follow-up that will theoretically have to occur during the fieldwork phase of the audit.

2) Attack the big items first – Your accounting firm should be reviewing and testing the financial statement line items that present the most audit risk first (i.e. the allowance for loan and lease losses, other real estate owned, and investments). Providing the information early during the process can assist with keeping the audit on schedule.

3) Provide as much information in an electronic format as possible – Most audits are performed in a paperless format, therefore, providing audit support electronically (whether it be scanned PDF documents or spreadsheets) can save your auditor the time it takes to scan in paper copies.

The above are certainly basic tips, however, if followed, it is very likely that you will see increased efficiencies by your accounting firm. Increased efficiencies means less headache for your institution and more time focusing on the things that matter most to you: operations and investor returns.

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