8 Secrets to a Successful Audit
From serving as a formal method of checking financial methods and procedures, to identifying accounting weaknesses and correcting financial problems, an audit is an extremely important step in fulfilling a board’s fiduciary responsibility for the financial prosperity of an association. The following are eight secrets to conducting a successful audit.
- Ensure compliance.
Not all associations and states are the same, so it’s essential that you check your association’s governing documents and state statute to ensure you’re complying with the stated audit and review requirements.
- Develop a schedule.
If your documents don’t specify a frequency for your community’s audits, adopt a schedule to maintain consistency with a rotating board. For example, you could conduct an annual review followed by an audit every third year.
- Use a third party.
Never have your management team or affiliated companies prepare an audit or review on behalf of your association. Always utilize a third party to avoid any conflict and to offer additional transparency to your homeowners.
- Ask questions.
Make sure you read and understand the notes provided by the preparer of your association’s audit or review. If you are unsure about something, ask for clarification.
- Inform homeowners.
Share your association’s audit or review with all community members. You can either send a copy via US mail, via email, or by posting to a secure community association platform.
- Keep records.
Note the completion of your association’s audit or review in the meeting minutes and document any recommended actions and when and how you intend to satisfy those recommendations.
- Give a deadline.
Provide the preparer with a deadline for when you’ll need the drafted audit or review. Some people will offer discounts for avoiding “tax season;” however, before agreeing to this, confirm your documents comply with the delayed timeline.
- Include costs in your budget.
To prevent delays and maintain consistency, include all audit or review costs in your annual association operating budget. By doing this, you can jump on getting it scheduled, and order it in conjunction with adopting the budget.