My horse Red inspires me. He is a 5 year-old, 590 kilogram gelding who at times, challenges my leadership, especially when we disagree on things like direction and strategy. He wants to zig, when I am thinking zag. He wants to gallop when I am in the mood for a slow walk. At first, I was intimidated by his size, power and stature. The more time I spent with him, the more I began to understand what it means when he flicks his ear, swishes his tail or stomps his foot. We have developed a trust and a respect as a result.
Off the pasture, I work with non-profits navigating requirements through accounting, auditing, assurance services, and governance expertise. As we move into the Audit season, emotions can ride high. Just like my relationship with Red, I have found that respectful, two-way communication and good process is the key to working together.
Standards are constantly changing like the wind. Audit planning has changed significantly since the new Canadian Auditing Standards (CAS) became effective for fiscal years ending on or after December 14, 2010. One of the most important changes is that communication between the auditor, management, audit committee, and the board of directors is now mandatory.
I recommend a face-to-face meeting with the board of directors to provide a smoother and happier audit trail. Just as Red and I have discovered, direct, understandable one-to-one communication is the foundation of a strong relationship.
Here are some helpful tips to creating a happy audit trail.
- Establish an audit plan that outlines the scope of the audit.
- Ensure two-way communication is timely and in-line with the requirements.
- Discuss critical factors one-to-one on a timely basis.
- Remember your audience. Your members and banker must feel confident that the statements are fairly presented. The board and management are looking for an interpretation of financial performance, ideas on how to improve internal controls and advice on any other significant matters.
- Consult your auditor throughout the year regarding any changes to your industry, organization, business processes, accounting and auditing standards and governance.
Happy “Audit” Trails,
Lorelei & Red