These tips are specifically for sponsor audits or other external audits, but they may also be used for guidance to prepare for an internal audit.
Planning & Preparation
Designate an audit liaison person within your organization who will act as the auditors’ main contact. This should be an experienced person with strong project management and communication skills.
Send a general communication to your department and staff stating that if the auditors contact them directly, they should notify the liaison.
Have the liaison develop a list of contacts who must be kept informed of the audit progress
Have the liaison develop a list of people who can provide support on technical issues and gathering documentation
If necessary, schedule and conduct a general training session with individuals who may be asked to participate in the audit either to produce documents, be interviewed by the auditors or participate in findings discussions
Contact auditors and set up entrance conference. Clarify the purpose of the audit and ask that audit requirements be in writing.
Alert the internal audit or risk department of the upcoming audit
Make necessary arrangements for the audit team – meeting rooms, preliminary interview schedule, entrance conference specifics including attendees
Entrance Conference
Develop a list of questions to discuss in the meeting including the purpose, objectives and scope of the audit; the awards to be included and sampling techniques; timelines including beginning and end of fieldwork and expected report date; and communication process.
Consider giving the auditor(s) a tour
Determine staffing and space requirements, including whether the auditor will need internet access during fieldwork; arrange for auditor on site space; modify meeting room needs as necessary
Fieldwork
Obtain the list of requested records and develop an approach for pulling the information on a timely basis. Give a target date for providing records to the auditors
Review the records prior to submission to the auditor. Consider if the records provide the necessary support. Anticipate what questions the records may provoke.
Maintain a list of all records provided to the auditor
Meet with auditors at least weekly to learn of the status of the audit and potential issues that are identified.
Verify the facts on which issues are based; perform re-calculations and review source documents, if necessary
Communicate at least weekly with those within the organization who need status updates
Liaison should attend meetings between faculty/non-financial staff and external auditors unless the auditor or faculty insist otherwise
Set up exit interview
Exit Interview
Ask for a copy of each finding or draft report prior to the interview
Based on the nature of the issues, ask representatives from other groups to participate, e.g. general counsel, internal audit, office of sponsored programs, controllers office, etc.
Agree on valid findings; negotiate those findings where the facts are not representative of the control weakness
Discuss with the auditor the disposition of the audit issue, i.e. verbal comment, report item, management letter
Escalate any disputed issues to supervisors.
Audit Report
Ask for the final draft report for review
Draft management responses and circulate to management for approval
Understand the follow-up process
Perform a post-audit evaluation to determine weaknesses in the process and potential changes to approach in the future
If you require assistance with your audit or ways to improve your internal controls you can reach out here
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