It is no secret that 2020 has been a year of change, abnormality, and uncertainty. Many of us have had to adjust to a remote environment and do things virtually that we traditionally haven’t been accustomed to do. The same can be said in the accounting and auditing world. For some, going through an audit of your organization is a stressful and busy time, and adding an extra layer of complexity by doing it virtually may bring additional challenges to light.
As your auditors, it is our responsibility to assist in the facilitation of the audit in the most efficient and effective way possible. Hopefully, these tips and tricks will provide some clarity on what to expect during a virtual audit and allow the process to be a smooth as possible.
Preparation prior to the start of the audit
- 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.
- Review the Audit and 990 PBC (prepared by client) lists provided by your auditor and begin to assemble the requested items. If you have questions regarding any requests, make a note of them.
- Your auditor will likely want to schedule a pre-audit call – during this call, feel free to ask questions you have regarding the PBC lists and how a virtual audit may be slightly different compared to physical fieldwork. Additionally, a more concrete timeline will be established to complete the audit. Please make your auditors are aware of all 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.
- Schedule a few days with your auditor to devote as the “audit fieldwork” dates, just like you would if the audit was to happen at your organization’s physical office/location.
During the audit
- Treat the virtual audit as if it were physical fieldwork – your auditor will likely ask you to be available via phone or email during the previously agreed upon specified days. Please let your auditor know of any meetings, appointments, etc. that you will be unavailable so that they will plan accordingly.
- 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 auditor 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 see an example below). Please provide the support labeled with the corresponding number, which allows for better organization and review.
- As part of our audit procedures, your auditors will need to evaluate your Organization’s internal controls. In a virtual world, it becomes more difficult, as your auditors aren’t physically with you to complete walkthroughs of your procedures. The following are ways in which internal controls can be evaluated:
- Schedule a call with your auditors to discuss each process (cash receipts, cash disbursements, payroll, grant compliance, etc.).
- Provide documented evidence of a control for your auditor to review – for example:
- If a board member 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.
- If the Executive Director reviews the payroll report, provide documentation that he/she reviewed the reports.
- Provide reconciliations between accounting software and donor databases.
- Schedule a Zoom or Skype call and physically go through the process while your auditor watches you complete each step.
What to expect after the audit fieldwork
- After the audit “fieldwork” has been completed, the process should be similar to physical fieldwork. Be available for any potential final questions.
- 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.
In this new “normal” there are a lot of differences when going through a virtual audit compared to physical fieldwork. The key is constant communication and flexibility. At the end of the day, your auditors and Wegner CPAs want to provide you the best experience possible and the highest quality product. We strive to be our best for you no matter the circumstances. We hope these tips are helpful and provide more clarity behind what to expect during a virtual audit.
