Six Ways You Can Prepare Your Charity For A Successful Audit
Here at AAB, we support a number of charities and not-for-profit organisations with their audits. Being able to help these amazing organisations is a privilege and our teams love working alongside these businesses. However, we know that many people may…
Blog12th Feb 2024
Here at AAB, we support a number of charities and not-for-profit organisations with their audits. Being able to help these amazing organisations is a privilege and our teams love working alongside these businesses. However, we know that many people may fear an imminent audit visit. It’s a period where you’re being financially analysed and quizzed so it makes sense that you might find this overwhelming and stressful. Managing the day-to-day tasks at the same time you answer a list of what might seem like never-ending questions can feel impossible. The key is to always be prepared. That’s why we’ve put together this six point plan so you can prepare for your next audit ahead of time and maybe even impress your auditors at the same time!
1. Encourage other team members to get involved
You may have a separate payroll team, HR staff, support workers or even a fundraising team that could help answer the questions from the audit team. This takes some of the pressure off the finance team, who may be trying to juggle all the questions themselves, and these wider team members could potentially provide further insight from their job role. Before the audit commences, it may be worthwhile to have a staff meeting to find out people’s availability in this instance to arrange in advance the best allocated days for people to talk to the auditors.
2. Up to date bank reconciliations
I cannot stress the importance of having an up-to-date bank reconciliation that has an analysis of any in-transit transactions. This is an indicator of good cash flow review and showcases the charity taking the necessary and important steps to ensure cash is being spent appropriately.
3. GRANT LETTERS
Having a good main access point for all grant letters/emails/communication received and filed within their appropriate period is a dream for an auditor. It means that the charity can pass over this information to the auditor for them to do their income testing (which will be a significant risk across most charities). It will be a good basis for the auditor to discuss any deferred or accrued income and means they can review this information in its entirety.
4. Multi-year funding
Multi-year funding tends to be a sticking point for most charities as the fear of “do I have to recognise this?” comes into play. Having this information available to pass over to the auditor and able to discuss (including any updated terms and conditions) creates a friendly talking point between auditors and the finance team.
5. Up to date fixed asset register
Many charities will capitalise various assets but may forget to add them to their fixed asset register or more commonly forget to remove any disposals…
An easy way to remedy this is by routinely checking the fixed asset register and ensuring it is up to date. If you have decided to add anything, keep in mind that an auditor will likely wish to see the relevant invoices and if disposing anything will want to see any receipts!
6. Legal documents
Ensuring any critical legal documentation, including articles of association, are routinely checked and up to date is both good governance and will inform your auditor of any changes to the charity. This is extremely important to keep these documents safe and confirm they are still appropriate for the operation of the charity.
This list is just a few of the ways you can prepare yourself for auditors visiting and support them during their visit. Most of these steps are good habits that can easily be developed and picked up within the finance team and put into practice. Utilising our six-point plan will help you to keep control of your audit fees.
If you have any queries about the points we’ve discussed or if you want to know how your charity can benefit from this approach please do not hesitate to get in contact with Emily Jackson, a member of our Audit team, or your usual AAB contact.