With technology today, it’s simple enough to find out what items you might need to prepare for an audit of your restaurant. But it’s not as common to find ways that you can improve your preparation tools. In this blog, we’ll look at five preparation tips/tools, and ways that enhancing these areas can improve your restaurant audit process and make your life easier in the process.
- Timelines and communication – Prior to the start of the audit, it is important for the client and the audit team to agree upon timelines and due dates. The timeline should include dates for preliminary fieldwork as well as year-end audit fieldwork. The due dates should include dates by which the client will provide requested items to the audit team for both preliminary and year-end audit fieldwork. The due dates should also include when the audit team plans to provide draft and final financial statements to the client. Generally, not meeting these agreed-upon dates or timelines is one of the leading causes of audit delays and additional billings.
Improvement: It is vital for there to be open communication between the client and the audit team. As auditors, we’re aware that day-to-day responsibilities may pull you away from the audit, but if there are going to be delays in providing information, it’s best to be communicated to the audit team as early as possible. Most schedules are fluid, but it makes it easier to accommodate changes the sooner the audit team knows there might be delays.
- Reconciliations – Client staff should be performing account reconciliations monthly for all balance sheet accounts. When these are not being completed, it is another leading cause for things not running smoothly or resulting in additional billings during the audit.
Improvement: As mentioned above, it’s recommended that the balance sheet accounts should be reconciled on a monthly basis. Some of these reconciliations could be prepared on a quarterly basis but we highly recommend a monthly basis. In order to achieve timely monthly reconciliations, it is a good idea to divide these up amongst your accounting staff. Client staff should be performing their own self-review on the reconciliations and they should also be reviewed by a more senior level of the staff before providing them to the audit team.
- New agreements and other documents – An important part of any audit is to gather the permanent file documents related to new agreements (leases, debt, services, etc.) to be maintained in the audit file. It can sometimes be cumbersome for clients to remember all new agreements entered during the year when asked to recall them at the end of the year.
Improvement: In order to increase efficiencies and ensure that nothing is missed during the audit, it is recommended that audit clients maintain these documents in one place throughout the year. All the documents can then be provided to the auditors at once; or if it works better for the client, these documents could also be sent to the auditors throughout the year as they are signed and then the auditors will already have them in their files.
- Audit Recommendations – A required part of the audit is to provide communications to those charged with governance that will include any material weaknesses or significant deficiencies discovered during the audit, if applicable. In addition to these issues, there are generally other recommendations related to internal controls. It’s important for the audit client to take these recommendations seriously.
Improvement: Make efforts after the audit is complete to review the recommendations in detail with your staff. These recommendations will increase efficiencies in your operations and will also help make future audits run more smoothly. If you are unclear about the recommendations in the letter, do not hesitate to ask your audit team for clarification or details on the specific instances found during the audit.
- Own your audit – Financial statement audits are a partnership between the client and the audit staff. While the auditors will be tracking the items requested from the client to ensure deadlines are being met, it’s important for the client to take ownership of these items as well.
Improvement: Assign someone from your internal accounting staff to be responsible for tracking the items on the audit request list. This person can follow up with their co-workers to ensure request items are completed on time. Acting almost as a liaison between the audit team and the client staff, this person can help ensure the audit is running smoothly and communication between the two parties is clear.
At the end of the day, as auditors, we want the process to run smoothly for everyone. Hopefully, these suggestions for improvement lead to efficiencies in your restaurant audit process. If you’re ever looking for other ideas, do not hesitate to reach out to your auditors. Any auditor would be delighted to sit down with their clients and discuss ways and tips to make the audit preparation and process better for everyone involved.
For more information on how Henry+Horne can help with your audit, check out our audit services page. If you have any questions about the above audit preparation tips, or Henry+Horne’s work with the restaurant industry, feel free to reach out!
Courtnee A. Greshner, CPA