“Other” Audits

We talk a lot about financial accounting, financial statements audits, and internal audit, but what about those “other” audits and financial reporting?  Occasionally, we organizations go through audits that don’t fit into our normal course of business.

For example, if an organization accepts or offers any Charitable Gift Annuities, they may need to register with the state as a provider of insurance.  With that comes annual reporting requirements and the periodic audit of those annual reports.  Organizations with retirement plans likely have their retirement plans audited.  IT systems may be audited as a part of the financial statement audit, and organizations that accept donations via credit card may have a PCI compliance audit.  Grant accepting organizations require an A-133 audit.  And, though we all pray they don’t happen, there’s also the possibility of the dreaded IRS audit.

At times the amount of regulations and number of audits can seem daunting.  In a given year, World Vision US and World Vision Int’l combined may have 7 to 10 external audits, plus additional voluntary and required reporting to groups such as Accord, InterAction, the ECFA, and the BBB.

How do we handle all this “other?”  First, as with all things, do it right the first time.  Audits are feared when you know you’ve done something wrong or when you’re unsure if you did it right.  Ensuring that we do our accounting and operation right the first time, to the best of our ability, takes a lot of stress out of audit and reporting, especially when the audits are out of the norm or unexpected.  This is where solid internal controls and policies/procedures come into play

Second, stay organized.  Keep lists or calendar reminders of all the audits and reports.  Have assigned point people for each audit.  Due dates occur throughout the year and do not always coincide with fiscal year end.  Keeping track of entrance dates, exit dates, deadlines, auditable year ends, etc. is very important.

Third, stay in scope.  With a new or infrequent audit, you may not understand exactly what they are looking at or why.  Before the audit begins, make sure that you have a good understanding of what the audit is covering.  Give the auditors the information that is within that scope, and keep conversations within the scope of the audit.  This helps keep the audit running smoothly and on time.

Four: be courteous.  Auditors/examiners are employees working a job, and likely have no personal interest in the audit outside of their job role.  Help make the job easy on both of you.

Finally, communicate.  If you don’t understand something, ask questions.  If the auditor brings up an issue, talk about it and investigate.  Your organization is unique and likely has a quirk the auditor has not come across before.  Take time to explain things as they come up, while the audit is in progress.  Don’t wait for the audit report.

See also:  A Good Audit Experience


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