As we close out the first month of 2023, the landscape of the workforce continues to evolve. Staffing issues continue to be a top concern for many organizations, and as a result, a continued focus remains on developing ways to enhance operations, specifically when it comes to where, when, and how work is being completed.

One popular response to staffing issues is a pivot to hybrid work environments. This approach allows employers to accommodate those who prefer an office setting, while also expanding their reach for talented prospective employees across the country and in some cases, worldwide. With that said, there can be many challenges to operating in a hybrid environment, and it is essential to have updated policies and procedures in place to mitigate any misappropriation of organization assets and ensure financial integrity.

You may be thinking, how, if at all, will the audit process change if my organization has once again shifted into a hybrid environment?

How will documents be reviewed? Will my auditors be required to be onsite? All these questions are valid considerations, and we hope that the following will provide some clarity and reduce any stress or uncertainty as your organization prepares for its annual audit.

Year-End Close and Preparation Prior to Receiving the Audit PBC (prepared by client) Request List

• Ensure that your organization’s books are completely closed to the best of your knowledge – all revenues, expenses, and other transactions are recorded in your accounting records.
• Gather (if not already done during the year) all significant and material grant agreements, leases, contracts, etc. in one area that can be easily accessed upon auditor request.
• In-Kind Donations – if you are aware of in-kind donations (pro bono legal services, consulting services, facilities, materials, etc.), please reach out to the donors and request documentation in writing regarding the value of the in-kind donations provided as well as the methodology behind how the value was determined.

Preparation Prior to the Start of Audit Fieldwork

• Review the Audit and 990 PBC (prepared by client) lists provided by your auditors and assemble specific items requested. If you have questions regarding any requests within the lists, please make a note of them.
• Schedule a pre-audit call with your auditors and discuss the following:
  • Date(s) of audit fieldwork.
  • Deadline to provide your auditors with the PBC list requests.
  • Location of audit fieldwork – depending on location, etc., arrangements can be made to hold the audit completely remote, completely onsite, or hybrid.
  • If the audit will be conducted in a hybrid environment, discuss what day(s) the auditors will be coming to the organization’s office.
  • Overall timeline towards audit completion – please let your auditors know of any deadlines to be met.
• If your organization hasn’t been set up already, your auditors can have a Sharefile Portal set up, which allows you to share all of the necessary documents over a secure portal.

Week of Audit Fieldwork

• Your auditors will review the items that were provided from the PBC lists. They will assemble questions and additional requests based upon what was provided. (For example, your auditors may review your organization’s accounts payable aging schedule and select certain transactions that they would like to see invoices for.).
• To the best of their ability, you can expect your auditors to provide you one subsequent list of all items that they would like to review with a corresponding number coding format. Please provide the support labeled with the corresponding number, which allows for better organization and review.
• As you begin to assemble items requested, items that are already electronic can be provided in that format and worked on by your auditors in the remote setting.
• It is crucial to have any hard copy documents ready for your auditors when they arrive onsite for the in-person part of the audit process. Any paper documents that are not provided/reviewed by your auditors onsite will need to be scanned and provided to your auditors electronically.
• On days that your auditor will be working remotely, schedule time during each day that the auditor can call and go over any questions. Please let your auditor know of meetings, appointments, etc. that you will be unavailable so that they can plan accordingly.
• On days that your auditor will be onsite, please ensure that all relevant personnel are available for any necessary questions and discussions. Similarly, please let your auditor know times that certain individuals will be unavailable.

Internal Control Walkthroughs and Documentation

• As part of our audit procedures, your auditors will need to evaluate your organization’s internal controls. Depending on the nature of operations, controls may be observed in-person or over a Zoom call with screenshare.
• Schedule a call with your auditors to discuss any changes in internal controls or processes.
• Based upon your organization’s internal controls, discuss with your auditors how these controls will be observed.
  • On the days that your auditors are onsite, schedule time for your auditors to walkthrough controls in place that are completed by onsite employees (observation of opening the mail and preparing check logs, approval of documents, etc.)
  • If controls are completed by a remote employee, schedule a time with your auditors to visually observe the process via screenshare.
  • Your auditors may also request formal documentation of certain reviews (for example, if a Board Member, Executive Director, etc. reviews bank statements, credit card statements, and expense reimbursements – provide an email of his/her approval or any other way that was documented after the review took place during the year.).

After Audit Fieldwork

• Your auditors will reach out with any final clarifying questions and requests (if needed).
• You can expect your auditor to update you on the status of the audit and communicate if there are any unexpected delays during wrap up.
• Don’t be afraid to reach out to your auditors if any questions come up on your end.

As the landscape of day-to-day workplace operations continues to change, the key component to a smooth audit process is clear and consistent communication. At Wegner CPAs, we are well poised to help you navigate these and other potential changes to your audit. Please reach out to your Wegner representative or Contact Us for any continued concerns and questions. For more resources, including guides, templates, and more visit our Resources page.