Your small to mid-sized company is on the rise, and you’ve amassed the solid financing and customer base that predict a strong future ahead. Your operations are fluid, your team is cohesive, and your customers seem satisfied so far. Things are going well.
You’re also stable enough at this point to attract the attention of auditors: tax, financial, and data security professionals who will need to ensure that you’re serving customers, taxpayers and other stakeholders with integrity and diligence. You’ve received notice of an impending audit, your first. What next? Here are a few considerations to keep in mind.
An audit is no reason to panic. Auditors are not looking to poke holes in your operation; they’re only there to ensure compliance and identify gaps that need to be closed. Work together with your auditors, not against them, and the process will be easier for both of you. Start by requesting a “PBC”, or “prepared by client” list. The auditors will provide you with a list of all the documentation, contracts, and flowcharts they will need to complete the process. For example, the list may include YTD sales, assessed value of assets and liabilities, documentation of your data management policies and procedures, opening balances for your balance sheet accounts, etc. By preparing the items on this list well in advance of the audit, you’ll keep the process shorter and less expensive.
Let your staff know that the audit will be taking place, so they have plenty of time to assemble and organize the items on your PBC list. As you do this, calculate the time required by each person to complete their task list, and try to schedule the audit only after this time has elapsed.
Ideally, you can prepare for the audit and move through the process without shutting down your pipeline or pulling employees away from vital responsibilities. Again, the key will lie in advanced preparation. Communicate clearly with auditors during preliminary meetings and determine how their analysis will work. For example, will auditors directly address their questions to your staff or will you be their primary contact?
If you tackle this challenge on your own, you may save a few dollars. But more likely, you’ll face auditor requests, operations gaps, missing or incomplete documentation, disordered accounts, and a host of other expensive and damaging issues that could have been avoided by enlisting the help of skilled, professional consultants.