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Keys to Minimizing Surprises in Your Audit

Jan 09, 2017

If you “love” surprises, you probably have never had anything bad happen to you in your life. Life is full of surprises. In an ideal world, we would maximize the “good” surprises and minimize the “bad” surprises, right? This article focuses on the latter, specifically those in your year-end audit.

Preparing for the audit is not simply a one-day event. Theoretically, any time you reconcile an account and look into variances in your accounts or financial statements, you are preparing for the audit. Effective preparation can lead to many benefits, including increasing knowledge of your operations, reducing stress, and ensuring deadlines are met.

Increasing Knowledge

At some level, all auditors perform some type of analysis of currentyear performance compared to prior-year and budgeted amounts. Whether this is in the form of ratios, account balances, financial line items, etc., you can do yourself a favor by performing your own variance analysis near year-end. It not only will help you respond to those looming auditor questions, but also can be a very valuable tool for managing your own financial statement fluctuations.

Reducing Stress

Let’s face it, as much as you enjoy the company of your auditors, the year-end audit is a stressful time for your employees. They not only have to focus on their own day-to-day responsibilities, but now have to track down requests from the auditors. In addition, there is always the concern that the auditors will find mistakes. Employees seem to be “on edge” during audit time.

With an increased focus on preparation and by following the four tips in this article, you could turn that around entirely. By actively managing your relationship with the auditor, you can spread out the “additional work” created by the auditors. As a result, hopefully your employees will then look forward to the auditors’ visit because it will give them reassurance that they are performing their jobs effectively.

Ensuring Deadlines Are Met

We live in a world of deadlines. The bank, the IRS, the board, owners, management, and other parties are all waiting for those audited year-end financial statements. When you are scheduling your audit fieldwork, you should keep these deadlines in mind. Typically, organizations try to see how quickly they can be ready for the auditors to come. In some cases, it can be more beneficial to start with the deadlines and work backward to see when might be the best time for the auditors to come for fieldwork. Maybe you have more time than you realize.

Regardless of the motivation, below are four ways to avoid being surprised during your audit:

1. Auditor Meeting

If your auditor has not taken the initiative to set up an initial planning meeting with you, it can be extremely advantageous to reach out to the auditor and schedule such a meeting. It is totally up to you what format you prefer. It could be a lunch, an informal meeting on the golf course, or a formal meeting at your place of business.

Regardless of the setting, it is vital that you discuss key changes with the auditor. Surprises during fieldwork work both ways, and if the auditors come across something they weren’t expecting (refinanced debt, restructured policies/procedures, etc.), suddenly you have another “list” of items to track down, and the time you have to provide those new items is now minimal.

Discussing with your auditor the “year in review” will help both parties identify what additional documents or agreements may be needed. In addition, any changes in key personnel should be discussed in this meeting. It would benefit you to introduce these new people to the auditors, especially if the auditors will be corresponding with them directly during the audit.

At this time, hopefully you and the auditor can get on the same page as far as the overall timing of the audit and the approach that works best for both parties.

2. Staff Meeting

Post-meeting, your auditors should provide you with a list of items they will need for the audit. With that in hand, it is now up to you to work with your staff and manage the list in a manner most effective for your organization.

For some organizations, it works best to have one person be the main contact with the auditor and be entirely responsible for managing this list. For others, it is more beneficial to delegate this list to various people and hold them accountable for reporting back to the auditor directly.

3. Check-In Meetings

Whatever approach you decide to adopt for managing the auditor’s request list, it is crucial that everyone is on the same page and that there is some way to periodically “check in” with the auditor and with your staff to ensure that information is provided appropriately. One tip is to set a weekly reminder on your calendar to check in with your staff and the auditor. A simple “How are you doing on those audit items?” or a “Did you need any clarification on any of the items assigned to you?” can go a long way toward ensuring that you are ready for the auditors before they arrive on site for fieldwork.

4. Information Submission

Often auditors will be on site and say, “I didn’t get #7 on the list.” The confusion could be because the item you sent them wasn’t exactly what they were looking for. You can help avoid this scenario by sending items to the auditor with a numbering system consistent with the auditor’s request list.

For example, if you are assigned #7 on the list, when you provide that item to the auditor, you should title it or somehow flag it as “item #7.” That way, if what you provided is not what the auditor expected, it gives you more time to adjust.

By numbering the items, you can identify to the auditors that you are submitting that file or document to satisfy #7 on the list. The auditors can then briefly check to see if that is what they were expecting. If not, it will give you time to get in touch with them to make sure you are providing what they need. Don’t hesitate to suggest to them that maybe they call that report something else that would in the future help trigger you to remember what they were actually asking for.

In addition, you should discuss with your auditors the preferred method for getting these various items to them. Do they want you to email them or simply have them on a flash drive when they arrive for fieldwork?


Remember, you have a voice. If you consistently find yourself buried the week the auditors are on site, you can express this concern to them. You can work with them to come up with a better plan. Maybe you need to invite them out one or two days prior to fieldwork to do some interim work. By spreading their visit out over a longer period, you can minimize the magnitude in which they “disrupt” your normal operations. Some companies prefer the “Band-Aid” approach and just want to get auditors in and out in one visit, even if it means staff having to work 50+-hour weeks. However, now might be the time to step back and ask whether that approach is truly best. Maybe it is time for a fresh look.


Steven A. Jordan, CPA
Senior Manager
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