6 tips to significantly reduce your external audit costs
07 November 2017
The time and expense associated with external audits are often seen as a fact of life - one which business owners do not have much control over. However, there are plenty of ways you can significantly reduce your external audit costs, as well as increase efficiency and make the whole process easier:
- Be proactive and organised: It’s a good idea to have your shell-financial statements and disclosures agreed in principle well before the end of the financial year, so you only have to drop in the numbers before the final audit visit. You should also ensure the basics like year-end account reconciliations are complete and reviewed. Agree audit visits, timetables and deadlines well in advance, and try to draft your financial statements before the audit begins so your auditors aren’t reviewing changing figures.
- Don’t leave the important things until the end: You’ve got a thousand and one things to deal with when it comes to an audit, but it’s important not to leave the most important bits to the end. For example, one listed client left a major impairment assessment exercise until a day before the audit committee and board meeting. They made an error which, when corrected, created much bigger problems – and this was just 24 hours before ASX release.
- Be upfront about the issues: When it comes to audit, transparency is key. Be upfront with any issues you think the auditor should know about - better they hear it from you than stumble across it later.
- Ensure your provider audits top-down: This is one of the biggest areas an organisation can save on external audit cost, particularly if you’re preparing consolidated financial statements. Auditors need to be able to see the big picture, and starting from trial balance or subsidiary level and working up will not allow them to do this, which can lead to over auditing. Instead, ensure they are able to start at the top level consolidated numbers and can look down from there.
- Foster a strong, positive relationship between the teams with good communication: Your finance team and your audit team are both working towards the same goal. Mutual respect of each other will go a long way in making sure your audit is efficient and effective. Timely communication at all levels ensures all parties are on the same page with respect to audit status, issue resolution and finalisation, making the process as efficient as possible.
- Choose the right team: It’s important your auditors have the right industry experience and expertise for your organisation. Ask sector-specific questions early on - it’s a good idea to meet with not only the Partner, but also the director or manager and the senior accountant so you feel entirely comfortable.
Your business is about more than the balance sheet and profit and loss statement. Having a team of audit specialists and technical experts to focus on the bigger picture helps. If you’d like to know more, or just want a confidential chat, connect with me or email [email protected],