However, it is helpful to keep these three tips in mind before the audit begins:
1. Obtain and Organize Documentation
It is important to keep adequate and organized documentation. This will allow you to have the proper support for your organization's business transactions and assist you in locating all required documents. What documents should be kept and for how long? This varies depending on the type of document. Please refer to Lindquist LLP's Records Retention Guide for Labor Organizations for a sample retention schedule.
Not only is adequate documentation vital to your audit, it is also required under the Labor-Management Reporting and Disclosure Act (LMRDA). The Department of Labor (DOL) has summarized helpful tips regarding the recordkeeping requirements of the LMRDA.
2. Look Back
Before your audit begins, it is helpful to review last year's management letter to determine whether audit findings and recommendations were addressed. It is important to address audit findings in order to strengthen your organization's internal controls, which can help reduce the risk of fraud and may potentially reduce audit costs. If you have questions regarding your management letter, you should discuss them with your auditor.
Communication is the key to a smooth audit. It is a continual process and should be done throughout the year. Communication between you and your auditor will ensure any issues are addressed in a timely manner. Important matters to discuss with your auditor include fraud, litigation and concerns regarding the continuation of your organization. Also, you should bring up any other concerns you may have.
Preparing for your audit is a process that occurs throughout the year. It involves obtaining and retaining adequate documentation, reflecting on the prior year's audit and communicating with your auditor. Following the tips listed above will help prepare your organization and pave the way for a smooth audit.
Donnie J. Springer, CPA, is a manager in the San Ramon, California, office of Lindquist LLP. She has eight years of experience with audit and accounting services for labor organizations and employee benefit plans. Donnie currently manages several audits of labor organizations that represent between 600 and 10,000 members. Donnie is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants.
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