Audit Readiness Tips: How Government Agencies Can Best Prepare for an Audit

Federal, state, and local government agencies are subject to external audit requirements, so it’s in your agency’s best interest to practice something known as audit readiness. Audit readiness is the process of preparing your agency for a financial statement audit to guarantee the audit is smooth, efficient, and effective. This process may begin months before the audit, and it will identify gaps in your agency and ensure your financial statements are GAAP (Generally Accepted Accounting Principles) compliant.

Begin Early

Procrastination where an audit is concerned will only lead to stressful delays and inefficient execution. Ensure your agency has key financial documents (including balance sheets, income statements, and cash flow statements) as well as supporting documentation organized and at-hand. This will allow your agency to fulfill document requests in a timely manner, and ought to minimize the need for additional meetings and follow-up calls.

Allocate Resources

Assign an individual, or a small team, to act as the point of contact with the auditor. The people involved should have a comprehensive understanding of your agency’s operations, compliance requirements, and ideally have experience undergoing external audits. This team can facilitate communication and requests between your agency and the auditor, improving efficiency and preventing inconsistencies or duplicated work.

(Over) Communicate

Chances are that your agency has undergone an external audit before. Don’t be afraid to touch base with your auditor throughout the year to update them on any administrative, system, process, or staff changes. By staying updated, your auditor can ensure that there are no gaps in controls or compliance in moments of transition.

Address Previous Findings

Likewise, if you have undergone an external audit, address any gaps or problems that are found in the audit promptly. Previous audit findings are an opportunity to improve internal controls and addressing them illustrates your agency’s accountability. An experienced auditor will be able to provide you with suggestions for improvement that can be used to help guide a corrective action plan.

Conclusion

An audit may seem daunting, but it’s a valuable tool in maintaining public trust and transparency. Audit readiness is the ongoing process that will prevent costly delays and get more value out of the audit for your agency.

Contact our expert team if you have questions about these tips, or if you’re looking for further information on audit readiness.