Download - Non Profit Hot Topics: All About Audits
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ALL ABOUT AUDITSNON-PROFIT HOT TOPICS:
GROUND RULESQuestions
• Attendees are in listen-only mode• This webinar is being recorded for future on-demand playback• Your participation represents acknowledgement that we are recording• Tweet questions & comments to: #WelchNPO
Windows Mac Tablet
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Christa Casey, CPA, CAPartner & Director of the Not-for-Profit [email protected]@WelchLLP
Garth Steele, CPA, CAAudit & Indirect Tax [email protected]@WelchLLP
PRESENTERS
WHAT WE’LL COVER TODAY
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• Auditing: The Basics
• Best ways to prepare for an audit
• Q & A
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AUDITING: THE BASICS
WHY DO WE NEED AUDITS?
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• Legislative requirement for some
• Funder requirements
• Good governance practice
AUDITOR’S ROLE
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• Express an opinion on the financial statements
• Designed to obtain reasonable assurance that the
statements are free from material misstatement whether
caused by fraud or error
WHO CAN PERFORM A FINANCIAL STATEMENT AUDIT?
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• Only licensed public accountants
MANAGEMENT’S ROLE
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• Financial statements
o Preparation and fair presentation
• Internal controls
o Designing, implementing and maintaining
o Financial statements are free from material misstatement
• Selecting and applying appropriate accounting policies
• Making accounting estimates that are reasonable in circumstances
BOARD’S ROLE
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• Select auditors
• Overseeing work of auditors
• Resolving disagreements
• Approving the financial statements
AUDIT PROCESS
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• Risk assessments
• Review of internal controls to help design audit program
• Materiality is determined
• Appropriateness of accounting policies chosen
• Testing
• Opinion - Inherent limitations exist
OVERRIDING PRINCIPLES
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• Confidentiality
• Independence
• Generally Accepted Auditing
Standards
• Generally Accepted Accounting
Principles
COMMUNICATION
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• Audit approach
• Independent auditor’s report
• Management reporting letter
• Report of audit findings for Board
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BEST WAYS TO PREPARE FOR AN AUDIT
CONNECT WITH THE AUDITORS PRE-AUDIT:
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• Review timing
• Review responsibilities
• Review potential audit issues
• Bring any new significant matters to auditors’ attention
AIM TO HAVE THE AUDIT FINALIZED WITHIN 90 DAYS OF YEAR END
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• Faster closes are more efficient
o Everyone is forced to be prepared
• Faster closes are easier
o Easier to obtain audit documentation
o Details are easier to remember
• Audit adjustments and other recommendations can be
implemented sooner
• Able to move on and focus on upcoming fiscal year sooner
TYPICAL 90 DAY TIMELINE
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• Get ready for audit field work: 4 to 6 weeks
• Audit field work: 1 week
• Audit prepares draft report and financial statements: 2 weeks
• Management review of draft & present to
board/audit/finance committee: 2 weeks
• Auditors prepare final report: 1 to 2 weeks
TO BE DEALT WITH RIGHT AFTER YEAR END - CONFIRMATIONS
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• Often needed for the following balances:o Bank accountso Investmentso Receivableso Significant funders
• Coordinate with the auditors in advanceo What needs to be confirmed?o Who will the confirmations be sent to?o Who will prepare the confirmations?o Where will the completed confirmations be sent?
ASK AUDITORS FOR A PBC LIST
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• PBC = “Prepared by Client”
• Typical things that need to be prepared:o Bank account reconciliationso Investment continuity scheduleso A/R & A/P listings that balance to
control accounto Support for A/R and A/P accruals
ASK AUDITORS FOR A PBC LIST
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• Make up of prepaid expenses and deferred revenue accounts
• Listing of capital asset purchases and disposals
• Support for capital asset amortization
• PL variance analysis
o Current year vs. prior year
o Current year vs. budget
• Trial balance & G/L detail
• Minutes for board and committee meetings
IS THERE ANYTHING THAT CAN BE DONE IN ADVANCE?
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• Interim transactional testing
• Update systems descriptions
• Audit checklists
• Changes to presentation and notes to financial statements
PREPARING FOR FIELDWORK
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• Must be 100% ready
o Auditing a moving target is not good
• Delays in fieldwork might mean delays in deliverables
DURING FIELDWORK
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• Be available to answer questions
o Establish timing protocol that works for everyone
POST FIELDWORK
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• Confirm with auditors that draft financial statements are still on schedule
• Determine who is to review the draft financial statements and provide any comments/changes to the auditoro ED, controller, treasurer, etc.
• Don’t forget to review audit journal entries & internal control issues raised
APPROVAL OF FINANCIAL STATEMENTS
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• Usually done by Board of Directors
• Occurs on the same date of the auditor’s report
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Christa Casey, CPA, CAPartner & Director of the Not-for-Profit [email protected]@WelchLLP
Garth Steele, CPA, CAAudit & Indirect Tax [email protected]@WelchLLP
Q&A