Four Tips for Reducing Audit Fees for State, Local, and Federal Governments
Audits are a big part of your state, local, or federal governmental operations — and can be a big item in your expense line. If you want to reduce audit fees, there are four simple things you can do to make the process more efficient and, therefore, less costly.
1. Get everything on the client request list ready before the audit begins
Preparation is essential to making good use of your auditors’ time and driving down fees. When you provide auditors all of the items requested when they first arrive, they won’t have to waste hours duplicating requests or recreating request lists. If the auditors obtain all necessary information while they are on site, they can complete the testing at your facility. But once they leave, they become busy with other audit engagements, which reduces their availability to finish testing and can cause delays in the audit issuance.
2. Reconcile account balances every month
By completing account reconciliations on a monthly basis, you automatically put a process in place that also reconciles accounts with the trial balance and helps you find any issues in a timely manner. And the monthly account reconciliations won’t cause extra audit preparation time because there will already be a standard internal control process to provide in the regular course of the audit. The more time you take before the audit to make sure your account balances are correct, the more likely it is the auditors will find fewer issues testing them. If you make this a routine part of your operations, it cuts your audit preparation time.
3. Minimize adjusting journal entries
It takes time to explain, document, and track all of the adjusting journal entries found during the audit. The more prepared you are for it, including time on your end to review the year-end account balances for accuracy and reasonableness, the less likely you are to have adjusting journal entries. Reducing the amount of time the auditors have in finding and recording adjustments can help to decrease the cost of the audit.
4. Tighten up internal controls
It takes considerable time for auditors to discuss and document any internal control issues or findings with your board of directors and management team. Management letters are meticulously written and require some expensive brainpower; they detail weaknesses in internal controls, offer suggestions for improvements, and consider ways to streamline operations. Explaining the rationale behind a management letter can be a lengthy and consultative conversation, and that means higher fees. When your internal controls are in good shape, you can spare your entity this escalation in audit fees.
How we can help
Audits are a way of life at government agencies. CLA’s state, local, and federal government professionals can help with process improvements so that your audits become easier, more efficient, and less costly.