Does
the word audit make your pulse race and put your antiperspirant to the test? Is
your monthly financial review fraught with the same level of fear that a trip
through the Halloween Hall of Terror brings? If you are a growing company and
are required to go through your first audit, it can be scary. The fear of the
unknown, worried what may jump out at you as you dig deep to tie out a balance
can create real panic.
Rather
than sweating bullets and launching into panic mode, think of an audit as your
annual wellness check-up and not an attempt to incite fright. If you eat right,
exercise and take care of yourself your check-up typically is not cause for
concern; but if you’ve consumed one too many lattes or value meals and ignored
what you should be doing, the scale and your doc will remind you to pull it
together and get back on track for a clean bill of health.
An
audit is very similar, but instead of your doctor, it’s your CPA telling you to
get your business organized and your financial health on track for a clean
opinion on your audit. An audit is beneficial in many ways, but essentially an
audit provides peace of mind that your financial statements paint an accurate
picture according to Generally Accepted Accounting Principles. This assurance
is vital if you are growing and need funding or if the funding you currently
receive has compliance requirements.
An audit is important, but it doesn’t have to be as scary as looking into a funhouse mirror. Follow this 5-step process, before your audit begins, it’s like having the answers to the test and will provide you with the clarity needed to minimize anxiety and help you master the mystery behind the first-year audit.
1. Communicate
with your CPA.
Your
CPA is hired to help you and is not out to get you. Have them set the stage for
what you should expect during the audit. Ask them what documents you will need
to provide and what tasks you should complete before the audit begins. Talk
about the timeline, when will it start, how long will it take? Who will be the
primary contact to ask questions and submit documentation? A little fact
gathering on the front end will go a long way to help the audit process move
along seamlessly.
2. Map
out a project plan
Take
the information provided during your initial meeting with the audit firm and
identify the tasks that need to you will need to complete. Assign the
appropriate person to the task and determine a deliverable date. Work with your
team to ensure that tasks are appropriately assigned and document any
dependencies and concerns that may interfere with the deliverable date.
3.
Communicate with your team and launch the project
Project
kick-off is essential. A proper kick-off demonstrates leadership supports and
identifies the objectives to accomplish as well as risks, assumptions,
dependencies, and timeline. Many of the teammates that are responsible for
supporting the audit are completely busy doing their “day job” and
don’t have a ton of extra time. Communication upfront with clear requirements,
expectations, and deadlines will help them to plan appropriately to coordinate
the additional work into their schedule so they can work much more effectively.
Clarity is the antidote to anxiety. Effective leaders are clear.
-Marcus Buckingham
4. Get
Organized
One of
the most frustrating aspects of an audit is related to cost increases. Additional
costs arise because the audit team has to do extra work to clean up your mess. Many
times, clients can avoid costly increases to their audit bill by ensuring they
have all their documents in order. For instance, are your accounts reconciled?
Do you have supporting documentation for revenue and payments? What about lease
schedules, do the payments tie out and do you have addendums and invoices to
support lease and CAM payments? Does your trial balance tie out, and is your
general ledger mapped appropriately to your financial statements, including the
statement of cash flow? Get organized, make sure your accounts tick and tie and
have the appropriate documentation on hand.
5.
Review your progress
Schedule
regular touchpoints to communicate progress. Think agile. In the IT world
during implementation, the team meets for 15 mins each day to give a quick
overview of the task they need to complete, progress, and concerns. Short,
frequent meetings allow the team to stay in synch, mitigate risks, and provide
support along the way. If you know how everyone is progressing, there are fewer
surprises, and likely you can head off any significant delays or concerns.
Invest
the time to follow the steps. As a former auditor, I’ve come to learn that
prepared clients are collaborative, not combative. Their team is happier, well
informed, productive, and the result is peace of mind and financial clarity. A
little communication, structure, and organization go a long way to help you and
your team manage the process and stay on task, bringing you one step closer to
a clean bill of health for your business.
Do you need help solving audit mysteries or getting organized? Barker and Associates can help you overcome audit anxiety and set you and your business up for success. We’ve created a Year-End Checklist for Audit Preparation that will help you streamline the process. Click the button below to enter your email and we will send the checklist to you right away via email.
There’s nothing that brings on a bit of panic that the end of the year is coming like seeing Christmas decorations prominently displayed at retailers before you’ve even heard the knock of trick or treaters at your door.
For me, as the year-end
approaches, I tend to count down shopping days and furiously plan out how I’m
going to get it all done. It’s an approach that many of us take as we navigate
holiday parties, shopping, travel, and the million other things that are
synonymous with the end of the year. Whether you’re a holiday enthusiast or
just a busy parent who is driven to make this the best holiday ever, It’s easy
to get super focused on the end of the year hoopla for your family to ensure
you get it all done, but what about your professional life?
For the business world the last
quarter of the year is full of opportunities though I’ve heard countless
excuses for the end of the year slack ranging from PTO, lack of focus or just
plain ole procrastination but this is the best time of year to outpace your
competition and get a jump start on the next year.
“If you fail to plan you plan to fail” – Benjamin Franklin
While everyone else is planning their
vacation, surfing online stores for that coveted gift, and running around to
countless holiday parties, what are you going to be doing?
Now is the time of year for a full-on
sprint to the finish, but to cross the finish line a winner, you need to take
some time to evaluate.
What did you set out to accomplish
this year?
Did you accomplish all your tasks,
achieve your goals?
The last 60 days is an excellent
opportunity for a big push to check off those last few boxes on the company
to-do list. If you haven’t set specific goals, think in terms of categories and
get your team together for a review. The more involvement in the evaluation
process, the more likely you will get the support and momentum you need to push
ahead.
Financially – Did you
meet your profitability goals, move inventory, or land the big customer you had
your sights on? If not, design some strategies and draft an action plan for the
next 60 days. Is there a campaign you could run, a promo, or maybe a customer
appreciation event?
Projects – Review
your project list. How many did you complete? Did your accomplishments align
with your goals? Assess current status on open projects and determine what you
can accomplish now.
Teammates – Look around,
is your team tired, haggard, and barely hanging on? What have you done this
year to take care of your team and show your appreciation? People can only push
so hard for so long, so if your team has been knocking it out of the park, look
for ways to acknowledge and reward. If you don’t know what to do or want to
find creative low or no-cost strategies, enlist teammates across all levels. I
think you will be surprised at how a little goes a long way towards building a
loyal following in the workplace.
Customers – What’s
your retention rate? How about an acquisition? Have you on-boarded the
customers you desired, and are they generating profitability as you
anticipated? Customers are essential in our business, and like teammates, they
need to be appreciated. A simple thank you note, a holiday gift, a discount…all
simple ideas that make a difference.
Conversely, you may have customers who
cost more to serve than they add to revenue. Now is a great time to review
those customers and ask why. It may sound crazy to think about firing a
customer, but if they are hurting profitability, morale, and taking too many
resources, now is the perfect time to devise a phase-out approach.
Environment – Take a look
at your surroundings. Have you spent the year head down so focused you no
longer see the stack of files or the supply closet in desperate need of a
KonMarie makeover? What about empty desks? Did you have layoffs this year, and
now a sea of cubes with an errant stapler is your only reminder of what once
was. Clean it up. No one needs to see that; it’s depressing. Reorganize your
space, check lighting, bring in some plants and ask yourself, is this a place
people want to spend most of their waking hours? If not, make a change. Enlist
your team. Nothing drives enthusiasm like a DIY project. Set some guidelines
and go for it, then plan a celebration to cap off the year.
Once you’ve evaluated your year and
have an accurate assessment of the current state, envision your future…dream
big with your team. Throw out a few SWAG ideas, brainstorm, put all options on
the table to discuss, and leverage to take massive action to reach your goals.
Collectively ask “if we were to look back in 60 days, describe the perfect
close to the year?” If you know what ideal looks like, then you have
something to work towards.
Lastly, map it out. Studies show that
we are more likely to be successful if we know what our goals are and then
create SMART strategies to turn those goals into reality. Write them out,
prominently display them and continually work with your team to get to the
finish line and celebrate you’re winning year.
“If you don’t know where you are going, any road will get you there.” – Lewis Carroll
Do you need help creating your winning
strategy, finding focus, or creating an action plan for success? Barker Associates is here
to help you kick it into gear for the end of the year sprint and plan out your
roadmap for future success.
