Most of the incorporated not-for-profit organizations in Ontario are governed by either the Ontario Corporations Act or the Canada Corporations Act. Both pieces of governing legislation require that all organizations have an annual audit. Under these pieces of legislation there are no exemptions from audit.
Given that your incorporated not-for-profit organization must have an annual audit you might as well ensure that it is as productive a process as possible. Following are a few suggestions to help.
Have the audit completed soon after year end
The auditor is presenting an opinion as to whether the financial statements of your organization represent fairly its financial position and changes in financial position for the year. It is generally helpful to get that opinion sooner rather than later. To ensure the audit is done on a timely basis call your auditor in advance of your year end and coordinate his/her efforts with those of the person responsible for your organization’s bookkeeping. Generally there should be no problems completing an audit within three months of the year end assuming that the books and records are ready for audit within six weeks of the year end. If the books and records are not ready within six weeks it may indicate an underlying problem in the organization with respect to timely financial reporting.
Request the same people each year
Maintaining continuity of audit personnel on the audit for at least two or three years in a row will reduce the amount of time required to explain to the auditors the unique characteristics of your organization and industry. Also, having the same person for several years gives you an opportunity to develop an ongoing relationship so that you can draw on their financial expertise throughout the year as the need arises.
Find an auditor who knows your industry
It is always helpful for your auditor to be familiar with your major funders and their reporting requirements. Auditors who are thoroughly knowledgeable about the characteristics of your industry will generally be in a better position to advise you on matters relevant to your organization such as how to maximize your revenue and use your financial resources as effectively as possible.
Accumulate a list of financial questions throughout the year and discuss your concerns with your auditor during the audit. This need not take long and could provide you with some valuable financial advice. Alternatively, call periodically throughout the year to resolve financial issues prior to year end.
Have the audit done at your premises wherever possible
Performing the audit at your organization will allow you to answer the auditor’s questions as they arise. This will avoid the annoying and all too frequent games of telephone tag that can occur during the audit process. Having the audit performed on site also reduces the inevitable hassles of sending additional information to and from the auditor’s office. It eliminates the inconvenience of being without your books and records for an extended period of time and also greatly reduces the risk of losing documents.
Discuss fees in advance
Attempt to obtain a firm fee quote and ask that any additional work that could possibly result in a fee increase be approved by you in advance of the work being performed. This will give you an opportunity to control the audit fees and to deal with problems in a cost effective manner (e.g. have the additional work performed by a bookkeeper as opposed to a chartered accountant).
To help reduce audit fees consider asking your auditor for a list of information that he/she requires from you prior to the audit being conducted. If necessary, request a planning meeting to ensure you understand their requirements. The information can then be prepared by you in advance of the year end audit visit.
Expect quality service
Finally, if you are unhappy with the relationship with your auditor and feel your organization is not being serviced appropriately then speak to your auditor. If you feel your needs are still not being met consider changing auditors. Select an auditor who you believe will provide superior service, has substantial knowledge of your organization’s specific field and with whom you think you can develop a productive working relationship.