Top Five Issues Experienced During Field Work

Your audit now seems to be on cruise control.  You’ve had your audit planning meeting and filled the top five audit requests, scheduled field work, and are eagerly awaiting the auditor’s arrival.  What can you do prior to arrival to keep the positive momentum?  Here are the top five issues experienced by auditors during field work and ways to resolve them to keep the efficiency you’ve already achieved.  

1. ‍Inadequate workspace and privacy.  Ensure you have an adequate space for the auditors with some level of security.  There will generally be more than one auditor on site to complete the audit testing, and during testing they may need access to a copy machine or scanner, depending on how audit support is provided.  In addition, auditors may request sensitive documents, and if you don’t provide a space with a little security, unauthorized individuals could access those documents.  Auditors typically return those documents once testing is completed, but make sure to discuss care of those documents prior to fieldwork so both you and your auditor have a clear understanding of the stewardship process.‍
2. Update any changes from the audit planning meeting.  When the auditors arrive for field work, the planning and risk assessment should be complete, and substantive audit procedures developed to reduce the risk of material misstatement to an acceptable level.  If any circumstances changed or significant transactions occurred since the audit planning meeting, be sure to inform the auditor.  Audit procedures may need to change if new risks are identified from the change in circumstances. Remember front-end planning is always more cost effective than back-end identification and testing.‍
3. Complete the requested documents on the request list.  The first five requests that you fulfill are primarily for additional sample selection.  The other requests on the list are for audit testing or financial reporting support.  To ensure your audit is fast and efficient, the auditor needs the requested information to complete the testing quickly.  For example:  to test relevant assertions for property and equipment, the auditor typically requests the following schedules to be prepared by the client:  roll forward of property and equipment; detail of capital additions by asset category (with supporting invoices for identified items); detail of asset disposals by asset category (with support for proceeds received for identified items); and an asset detail schedule by asset category that includes current and accumulated depreciation.  Obtaining these documents together at the beginning of field work greatly reduces the testing time, regardless of the number of assets selected for testing.  A good tip, especially as it relates to the property and equipment roll forward, is to prepare and reconcile monthly and link a year-to-date tab to your monthly tabs.  Once you’ve reconciled for the last month in your fiscal year, if you’ve linked properly, your year-to-date roll forward is complete and ready to submit to the auditors.  This proves more difficult with larger organizations with multiple locations or persons authorized to purchase capital assets, but a good system of internal control and communication will yield the expected results.‍
4. Coordinate daily discussion time to answer audit questions.  Most audit procedures are supplemented by discussions with or answers from management.  To keep your day from getting derailed by “do you have time for a quick question” every 10 minutes or so, ask your auditor to submit questions through email as they arise, catalog them, and then schedule a time either late in the day or early the next morning to discuss those questions.  Take at least 30 minutes to an hour prior to your meeting to review and research (if necessary) the auditor’s questions to contribute to an efficient meeting.  Once you meet with the auditor and provide answers or additional documentation, you can focus on your everyday tasks.‍
5. End field work with a closing meeting.  If all goes well, once field work is completed, the auditor will have obtained enough audit evidence to support an unmodified opinion. The purpose of the closing meeting is three-fold: (1) identify any remaining testing items to be supplied to complete audit testing; (2) discuss any proposed audit adjustments and determine which to record and which to pass; (3) update the timeline on draft report delivery and any items needed to complete.  One item typically remaining to test is subsequent events.  Auditors are required to review subsequent financial information through the date of the auditor’s report to determine if any items should be recorded (type 1) in the year under audit or disclosed (type 2) in the footnotes to the financial statements.  This testing is completed near the end of field work so support can be reviewed, tested, and documented once.  Adjustments may be needed to properly state the financial statements in accordance with accounting principles generally accepted in the United States of America.  These adjustments should be discussed with management for ultimate resolution.  If the cumulative passed adjustments exceed the auditor’s threshold for materiality, one or more of the passed adjustments will need to be recorded.  Confirm the delivery date of the draft financial statements with your auditor.  Pending completion of audit testing, the draft of the financials will need to be prepared and reviewed by the auditor’s quality control group prior to sending a copy for your review.  Confirming the timeline keeps that top of mind and ensures there are no surprises on either side.

Like the old saying goes, “every little bit helps.” Small time savings throughout the audit will help with the overall completion and will help you from getting too far behind while the auditors are on site.  Your audit testing is complete – now let’s issue that report.

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