Financial Control: Preparing for the Audit

Nixon Pratama

2001553125

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You begin preparing for an audit at the beginning of the financial year. It is a good idea to ask your auditor at this stage what information will be needed for the audit.

What do you need to have ready for an external audit?

The audit is usually done within a few months of the close of your financial year, and as soon as possible. It only looks at the financial year that is being audited.

When you are expecting the external auditors to come in to examine your financial books, you should have the following documents ready:

• A copy of your organisation’s constitution (if this is the first time this auditor is doing the books or if you have made any changes to the constitution since the last interaction with the auditor).
• Copies of contracts, agreements, or letters setting out the conditions of grants, legacies or other income received for specific purposes.
• Copies of budgets for ongoing work or special projects.
• Copies of grant applications forms.
• Copies of the minutes of finance and other relevant sub-committee meetings.
• Copies of the minutes of Board meetings relating to finance.
• Your income and expenditure analysis records.
• Supporting documentation for income.
• Receipt books if you issue receipts for money received.
• Your petty cash analysis records.
• Supporting documentation for your petty cash records.
• Bank statements for the year.
• Bank reconciliations for the year.
• Cheque stubs (counterfoils) for all cheque books used during the year, and the one currently in use if it was used for the year under audit.
• Cheques returned to the organisation by the bank once they have been cleared.
• All deposit book records.
• A list of everyone the organisation owed money to at the end of the financial year.
• A list of everyone who owed money to the organisation at the end of the financial year.
• A list of creditors and debtors from the end of the previous financial year.
• Records of statutory payments made, particularly on staff salaries.
• Details of all assets.

The auditor may also ask to see:

• A list of accruals – income the organisation has received for goods or services it has not yet provided;
• A list of pre-payments – expenditure the organisation has made for goods or services it has not yet received;
• Lists of accruals and pre-payments from the end of the previous financial year.

Other documents the auditor may need or that will help the auditor include:

• Vehicle log books.
• Value Added Tax records.
• Tax records.

CIVICUS: World Alliance for Citizen Participation is an international allianceestablished in 1993 to nurture the foundation, growth and protection of citizen actionthroughout the world, especially in areas where participatory democracy and citizens’freedom of association are threatened. CIVICUS envisions a worldwide community ofinformed, inspired, committed citizens in confronting the challenges facinghumanity.

These CIVICUS Toolkits have been produced to assist civil society organisations build their capacity and achieve their goals. The topics range from budgeting, strategic planning and dealing with the media, to developing a financial strategy and writing an effective funding proposal. All are available on-line, in MS-Word and PDF format at www.civicus.org and on CD-ROM

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