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Why Audit in Tough Economic Times?

With the economy still struggling to climb out of its downward spiral, clients are struggling to cut costs every place that they can.  Some clients’ audit needs are dictated by Arizona State Statute, federal loans or grants, or some other outside stipulation.  For entities that may have a choice, why should they spend money on a financial audit?

Some of the benefits of an annual financial audit include the following:

1) Good financial audit results can convince the stakeholders (legislators, community groups, citizens) that their faith is justified and tax money well spent. The annual audit report, especially the Management’s Discussion and Analysis and Comprehensive Annual Financial Report’s, provide the opportunity to tell them what was accomplished over the fiscal period.

2) An audit report can help build an entity’s reputation for professionalism, integrity and performance. The annual audit report can enhance an entity’s reputation for clear, objective and factual information.

3) The auditors should, in addition to the financial audit, provide recommendations for improvements and efficiencies which may save hard-won dollars. Auditors can and should be good listeners, communicators and problem solvers.  Examples of this could include using audit management comments to inspire a quarterly newsletter to staff, Board members and Council members or even a periodic payroll insert covering internal control issues or policy reminders. This can serve to build support for management recommendations and/or auditor recommendations.

4) An audit can provide the means to locate financial reporting and/or internal control problems which can be nipped in the bud.

5) Having knowledgeable financial auditors allows for year-round contact with professionals who provide an ongoing resource for expertise in handling nonroutine items as they occur.

6) Good financial reporting can be an excellent tool for assisting with future budgeting.

Jill Collins