Prepare for External Auditor Visits
No one enjoys an audit, but planning for an auditor’s visit can make the process less painful. A well-executed audit will identify weaknesses in your organization’s procedures and provide findings that can increase efficiency, satisfy shareholders, and boost your organization’s credibility. Remember: Auditors aren’t coming to “get” you. Their job is to take a close look at how your organization operates so you can make any necessary changes.
How the process works
The team conducting your external audit will talk to individuals at all levels of your organization and possibly external parties with whom you transact business. They’ll especially want to talk with people who are involved in the end-to-end processes.
Auditors will focus on talking to people who can identify key controls. The auditors will assess the control design and operating effectiveness and confirm that a specific process is compliant. They will also want to gather supporting documentation for samples of transactions and testing. Auditors will review your end-to-end business operations, evaluate the controls in place, and review supporting documentation.
What auditors look for
Auditors seek full auditability of processes, transactions, and systems. In practice, this means they will look for the following.
- Completeness: Is anything missing from documentation, processes, or procedures?
- Existence or occurrence: Does documentation exist? Did a particular thing happen?
- Accuracy or valuation: Are the numbers correct?
- Rights and obligations: Does the company own or owe what they think they do?
- Presentation and disclosure: Is everything recorded in the right place?
How to prepare for an external audit
Auditors will need guidance from internal personnel who will serve as audit resources during the audit. Take time to identify qualified resources who have the necessary knowledge of processes and related systems. To present a unified message, it is critical to identify one or two people to serve as key resources for each assessable unit. These individuals should be qualified to speak to all questions an auditor might ask about a specific topic or domain. If there is something they can’t answer, that resource should be able to hand the question to another person, who would only answer that specific question.
Choose personnel with the following attributes:
Strong communication skills: Understands the proper language of delivery and is assertive, effective, and an active listener. Must be able to provide specific responses to questions.
Self-assured behavior: Maintains direct eye contact, is attentive, manages facial expressions, and projects confidence.
It makes sense to prepare your team prior to an auditor’s visit. You can provide training and develop reference guides for internal audit personnel and perform mock audits.
A mock walkthrough can help key personnel gain confidence on how to present and communicate with auditors. Simulations or practice runs of the standard operating procedures (SOPs) and desktop procedures will help the people serving as audit resources recognize existing gaps and build confidence in understanding the processes. Mock walkthroughs also provide people with an understanding of where key documentation resides so they can provide it to auditors upon request.
Prior to a walkthrough, obtain and review all key policies and procedures to verify that each is
- reflective of the current environment
- reviewed and approved by an appropriate level of management within the past year.
How to act during an audit
Auditors expect and appreciate an organization that appears to be “in control” with a clean work area. Anticipate or identify problems and prepare clear and concise explanations beforehand. You can prepare personnel by sharing these tips on communicating with auditors:
- Be on time.
- Be nice. Human nature plays a role. Auditors may act like robots, but they are people.
- Be dispassionate. No displeasure, no disdain.
- When asked questions, be honest, to the point, and consistent. This will build and maintain your credibility. Your answer will be auditor‐verified through observations, confirmations, and testing.
- Only answer the question that is being asked—no more, no less.
- Avoid sidebar conversations even if they seem related, as this could cause more questions or findings.
- If you don’t understand a question, ask for an explanation until you do. Only give an answer once you fully understand the question.
- Do not offer subjective opinions or theories. Avoid words such as “probably” or “should be.”
- Above all, be professional.
You are the experts in how things work at your organization, and auditors cannot understand your process without your guidance. Tell the auditors your story and make it easy for them to understand what you’re saying. Provide them with a map of your entire process up front and then answer all questions that arise.
MorganFranklin Consulting understands that any audit can feel stressful, and we work with clients to support them every step of the way—from audit preparation to dealing with audit findings. Reach out to our Audit Readiness and Sustainment team to discuss your upcoming audit needs.