Preparing Clients for an Audit

by Joshua Chananie, CPA, Sax LLP – July 7, 2017
Preparing Clients for an Audit

When it comes time to audit a client’s financial statements, do you find yourself wasting valuable facetime discussing why they’re not ready, discovering the same mistakes from last year, or explaining why they even need an audit? Whether for bank compliance, bondholders, shareholders or not-for-profit regulations, the audit itself is inevitable. But there are steps you can take to help your clients be better prepared, including setting up-front expectations, proactive planning, establishing accountability, sharing knowledge and providing timely feedback.

Setting Up-Front Expectations

Accountants are naturally deadline driven. Without internal and external deadlines, work would carry on indefinitely. An efficient audit process begins with the audit team and client establishing a timeline of expectations. Determine when deliverables will be due from the client and when the client can expect deliverables from you. Make sure the timeline is communicated to your entire audit team as well as the client’s accounting department (and board, if applicable). Setting up-front expectations will help to keep everyone on task and lay the foundation for accountability.

Proactive Planning

CPAs don’t limit tax planning or advisory services to certain times of year, so why view audit services that way? No longer confined to January through April, the audit season is a 12-month process that in­cludes proactive steps we can take through­out the year to plan and prepare.

Some fieldwork can be performed in the “off-season” to lessen the burden on the audit team and client during the height of the audit season. At quarterly client meetings, discuss how to shift work out of “busy season” and identify any potential audit issues that may arise. Many times, the issues uncovered during these sessions can be resolved prior to the year-end work commencing.

Establishing Accountability

Just as we hold our partners and staff ac­countable for their performance, we should hold clients accountable for their responsibilities in the audit relationship. As service providers, we are accustomed to honoring deadlines and adjusting our schedules to accommodate changing needs, but we often don’t ask for the same professional courtesies in return.

Too often, auditors go into the field and the client is not ready, forcing the team to piecemeal the job together. This is especially common when the client work is planned for January and February. In addition to delaying the process and putting pressure on the staff with overlapping engagements, this situation increases the risk of inefficiencies and significant overruns. Nothing frustrates an owner or board more than paying extra for staff inefficiencies or notifying financial statement users that the audit will be delayed. With clear expecta­tions and accountability on both sides, the audit team can partner with the client to prevent that from happening.

Sharing Knowledge

CPAs are consistently sharpening their skills because of licensing requirements and increased competition, but what about clients’ professional development in the areas of accounting and finances? Rather than proposing the same journal entries and correcting client schedules year after year, educate your clients on their errors and areas of improvement, as well as accounting pronouncements and changes that directly affect them. Taking advantage of these teachable moments will elevate the client experience, build your credi­bility with their staff and result in a much smoother audit process.

Timely Feedback

The exit conference at the conclusion of the audit should include not only the required communications but also rec­ommendations for improving procedures. The audit is an ever-evolving process, with feedback from both sides being an integral part of continually enhancing it.

Being an effective audit provider goes beyond simply preparing schedules and a financial statement. Helping your clients prepare, learn and improve in this area will go far in building trust and adding more value to your year-round relationship.


Joshua A. Chananie

Joshua Chananie, CPA, is a partner at Sax LLP and specializes in audit, accounting and advisory services for the manufacturing and distribution industry and not-for-profit organizations. He is a member of the NJCPA Nonprofit Interest Group.

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This article appeared in the July/August 2017 issue of New Jersey CPA magazine. Read the full issue.