10. Begin working on your schedules well in advance of the audit. And remember, if you have questions, your auditor is just a phone call or email away. 

 9. Keep track of issues you struggled with during the year and communicate those to your auditor. It will help the auditor key in on important areas at the beginning of the audit and prevent surprises down the road. 

 8. Get the confirmations back to the auditors quickly! The more time there is to send these out the better chance we have of getting them back. Every confirmation that’s not returned creates more work for everyone. 

7. Communicate your schedule to the auditors. We understand that your normal responsibilities don’t go away during the audit, and we’ll do everything we can to work around your schedule. 

 6. Post all adjustments to your trial balance before you provide it to the auditor. 

 5. Those schedules we talked about earlier – make sure they tie to the final trial balance you just provided to the auditor. 

 4. Make requested documentation easy to access and provide it to the auditors as soon as possible. 

 3. Be available! Set aside some time on your calendar to answer questions and prepare information requested during the audit. 

 2. Maintain good processes and controls. The more checks & balances you have, the less likely it is that your auditors will find errors. 

 1. Don’t do anything fraudulent or misleading during the year (always a plus). 

The key to success is communication and preparedness. If you apply these steps you should see a reduction in the amount of friction an audit can cause.

Fraud is a hot topic. If you don’t think so ask someone who used to work for Enron or invested in Madoff’s investment company - they might change your mind. Because of instances like these, people often think of fraud in large terms, and the mention of the word carries a lot of weight. But fraud can occur in all sizes and forms.

Who is likely to commit fraud? Most people use what is commonly known as the fraud triangle to identify areas where one can commit fraud. The three criteria are Pressure/Incentive, Opportunity, and Rationalization.

The pressure/incentive trait is common with performance based jobs where there is motivation for employees to record false sales to meet sales/performance quotas or up their commission, or other incentive pay.

Opportunity rears its ugly head when an individual has too much control over one key process in a business. Let’s say a cashier at a bank did not have to reconcile the cash drawer at the end of the day. The “opportunity” is there for cash to be stolen without any knowledge of it being gone.

A big one in today’s economy is rationalization. This is commonly referred to as the “I deserve this” mentality. An individual develops a frame of mind where they can justify their actions and commit the fraud even though it is outside their typical ethical guidelines. For example, the company is generating large revenue streams, but an employee needs money to pay for his kid’s summer baseball league; this employee could find themselves thinking “They won’t miss this money, and I can’t say no to my child.”

Now let’s not confuse fraud with honest mistakes, errors, or plain ignorance; there is a difference. Fraud is defined as “intentional” deception…intentional being the key word.

Stay tuned as we post methods to identify and address fraud and help you to minimize the risk of fraud in your business.