Like any season, a business’s fiscal year-end causes anticipation in some and dread in others. One major stressor during this time of year is the annual audit: soon, an unbiased third party is going to open up all your financial books and cast judgment on the way you’ve kept them this past year. Or so the feeling goes.

But even as the season starts, auditors like us begin laying the foundation for this year’s audit. In fact, the more work we can do ahead of time, the less painful, time-consuming, and deadline-dependent the audit becomes. We call this season “preliminary.”

What Happens During Preliminary

Though we can’t speak for every CPA firm, we can say that preliminary is a crucial time for Lemler Group. Once we have the required documents, we begin performing compliance testing before the year-end date, checking disbursements, receipts, and a number of other specific compliance areas, depending on the type of organization. For example, we check tenant files and security deposits, among other things, for affordable housing properties.

This means we spend fewer hours during busy season asking organizations for additional documentation or information and minimize the amount of time we interrupt their normal business operations.

What’s in a Preliminary Request List

Some firms that run preliminary work send a standard request list to all their clients. It may include dozens of documents that may or may not be relevant to your organization, and it makes people less likely to respond promptly with the requested information, if at all.

However, firms like Lemler Group customize the request list for each client, fine-tuning the types of documents and even the names of them for each client. When these lists are thought-out, they likely include all required documents to get a good head start before the end of the year. Sometimes these lists are short and sweet, but other times they can be daunting. Even when an auditor from Lemler Group sends a lengthy request list, chances are they need everything on the list to do their job well.

You can get ahead by preparing regularly requested documents before the request list even arrives. For help on what documents are commonly requested during preliminary, see our blog post on Preparing for an Affordable Housing or Non-Profit Preliminary Audit.

Respond to Request Lists Promptly

When the auditor’s request list hits your inbox in the month or two before your fiscal year ends, you may put off responding or gathering those materials until they’re scheduled to visit. But this procrastination just slows your organization down.

Any documents you can send your auditors before they arrive in-office will help them do more work on your audit without taking up time and space in your facilities.

Raise Questions and Issues Immediately

Another way preliminary season and early documents help us prepare for an audit is that they give us a chance to identify and work through problems before they become critical. As auditors, we rely on more than just our own intuition to identify issues; we need others to point out things like changes in ownership or other behind-the-scenes information.

Make Responding to Request Lists Easy

One way to guarantee that you’ll get stressed out by a preliminary audit request list is by making the task to be complicated and irregular. Follow a few tips to stay organized during the year, making the audit as smooth as possible.

1. Set a Reminder

We value preparedness at Lemler Group, which means we do little things like setting reminders to follow up with clients or reach out to friends.

Though it may be hard to prepare in this way with a customized, ever-changing request list, you can probably be sure of a few items you’ll need, most of which will be available as much as six months before the year end. Save these files in a place you’ll remember them so the task of responding to the request list is that much easier.

2. Print it Out

If you can’t work ahead of time, consider making a physical copy of your auditor’s request list when it comes it. Put it somewhere highly visible or even inconvenient, so it’s always on your mind to check things off. Also, if you’re ever opening up a requested document for another reason, this will remind you to send a copy when you’re done.

3. Reward Yourself

Finally, when you’ve completed the request list or even a few items on it, treat yourself. There’s no better motivator than a well-deserved donut or a 10-minute break.

Stay on Top of the Work

We believe the key to a successful audit is a successful preliminary, and it all starts with sending a request list. Every item on that request list represents one less item we’ll have to request during the final audit, so it’s helpful to make each item count.