As part of cost management, you might be queried by management on the escalation of audit fees.
Generally, audit fee increased due to the direct result of more audit hours being expended by the external auditors.

To reduce or at least maintain the audit fee we should proactively:

· Provide more assistance to the auditors, including preparation of schedules and supporting data.
The reported amount in the schedule should be easily traceable to the general ledger and supporting documentation. Differences or variances should be clearly reconciled and explained. This will then enable the external auditors instead to devote their time to essential audit matters.

· pre-plan the year end work schedule to ensure greater efficiencies

· ensure the timeliness of meeting established schedules

The following are some suggestions for the financial executives to assist the external auditors and to reduce the time required by your division personnel are listed below:

· contact the auditors in advance of their schedule arrival and coordinate their requirements with your year-end schedules.
With this pre-plan contacts, you can then:

o obtain from the auditors, the list of audit schedules and related worksheets. The format and the required deadline for these schedule must be agreed with the auditors.
o inform the auditors of any changes in accounting systems, accounting methods, policies, operations, organization or accounting personnel which occurred during the year.

· Have your accounting records and account reconciliation up-to-date
· Prepare work-papers that are neat and concise
· Prepare clear and timely bank reconciliations and lists of accounts receivable and payable
· Where there are exceptions, ensure that the documentation of the exceptions ( have been approved ) is made available to the auditors.
· Ensure there is an up-to-date organization chart, list of authorized signatures, main accounting routines and document flow charts are items which should always be available for examination by the auditors
· Impress upon your staff the need and usefulness of the audit function and insist that your staff give prompt and willing assistance to the auditors.

If you found this post useful, keep updated with future posts by subscribing to FMAccounting (for free) through RSS or email.

Related Entries

• Samples of Corporate Finance Roles And Responsibilities
• Outsourcing The Internal Auditing Function
• Establishing Control Points When Outsourcing The Accounting Function (Part 2)
• The Importance of Information Technology Controls And Security
• SOP: Conducting Physical Stock-count