Tips to Prepare Your Municipality for the ’22 Audit
Here we are, at the start of a new year- at least according to the calendar. For many of us in municipal finance, we will not fully enter 2023 until the audit is complete.
While the timing of this post may seem appropriate as the fiscal year just ended, it is unfortunately (almost) too late to make significant changes for the 2022 process. Sustainable, significant improvements that will reduce workload and stress at year-end is more than a list of action items to be completed – it requires cultural change within the organization as well as within the finance team.
In this article we will focus on a few tips that can help your 2022 audit preparation, as well as give you the tools to start the cultural shift in 2023 and lead you to a place where the term ‘year-end’ no longer makes you shudder.
Complete the accounting records before auditors arrive
Often it is a monumental effort to prepare the accounting records and financial statements for finance staff. However, the end of this effort by your team is the starting point for the audit team, thus it requires additional time and effort from municipal staff to compile source documents, working papers and analysis for the audit. This time should be considered in your year-end project planning – by ensuring appropriate resourcing during audit field work for these tasks, and by making space to prepare as much as possible before the audit team arrives.
Because audits are completed from the financial statements working backwards, late entries and adjustments cause significant re-work for the audit team, which in turn can lead to additional requests for municipal staff. This leads to frustration on both sides and can lead to increased audit fees – having the accounting records complete before the auditors arrive is the single biggest improvement you can make as you move towards a smoother audit process.
Reduce Bottlenecks
Year-end preparation is a game of ‘hurry up and wait’ at times. Too often, we delay finalizing our financial information waiting for every last invoice to arrive and while this ensures accuracy and completeness of data, it often comes at a high cost to the individuals responsible for performing accounting and reporting functions in advance of audit deadlines.
Two common bottlenecks are accounts payable processing and tangible capital asset (TCA) accounting.
Breathe…
Don’t underestimate the impact of taking care of yourself. Ensuring you get adequate rest, time away from work and proper nutrition are more effective to improve productivity than our too-common default of ‘hustle harder and work longer’.
Further Reading
See here for Government of Alberta information on municipal financial returns and sample statements for municipalities and regional services commissions.
About Metrix Group
With five offices throughout Alberta, Metrix Group has over sixty years experience providing accounting and related services to credit unions, rural gas co-operatives, municipalities, school boards, and non-profits. We also serve small to medium sized owner-operated businesses across agriculture, manufacturing, and technology.
About the Author - Stephanie Porter, CPA
As a lifelong learner and problem solver, Stephanie works with clients to optimize business processes, data management and reporting to better position finance departments as business partner and advisor to their organization. Stephanie has spent most of her career focusing on municipal government, both as controller and as an external consultant.