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Accounting & Auditing

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The word “audit” can be intimidating, but we’re here to work with you throughout the process.

Whisman Giordano & Associates complies with all standards of the accounting profession, including a quality control system emphasizing independence and objectivity, continuing education, and adherence to policies and procedures that exceed the profession’s requirements.

We specialize in auditing the following:

  • Not-for-profits 
  • Construction and Real estate entities
  • Affordable housing projects and management companies
  • HUD programs
  • State and local governments
  • For-profit businesses 
  • Employee benefit and pension plans
  • Healthcare organizations

Our accounting and auditing services include:

  • Single audits under the uniform guidance
  • REAC submission
  • Submission of data collection form 
  • Reviews and compilations
  • Reporting on specified elements, accounts or items of a financial statement
  • Reporting on agreed-upon procedures
  • Compliance reporting on laws, regulations, and contracts
  • Reporting on existing internal controls
  • Transactions, mergers, and acquisitions
  • Implementing new accounting pronouncements
  • Small business services
  • Controllership and outsourcing
  • Cost certifications
  • Cash flow analysis

Common Audit Questions for Companies

The short answer is, it’s possible. You may be required by lenders, insurance providers, customers, government regulators or your board. The benefit of an audit is that you receive an impartial review of the overall health and performance of your company. You’ll learn your strengths and any weaknesses, giving you the opportunity to work on those areas. 

There are several scenarios which would require your financial statements to be audited:

  • Your bank loan may have a covenant requiring your financial statements to be audited annually.
  • Your bank may request audited financial statements prior to extending a loan or line of credit to assess liquidity and financial risk
  • Your insurance and/or bonding company may require an audit before providing coverage.
  • Customers may request audited financial statements before agreeing to a contract.
  • An audit may be required by a governmental regulatory body.
  • Your By-Laws may require an audit to provide the board and management with insight into the financial health of the company.

It’s important to note that some of the above groups may be satisfied with a lower level of assurance on your financial statements like a Review or Compilation or even a copy of your tax return.  Each company’s situation is unique to their situation.

Questions! Your auditor will ask questions to individuals throughout the company. This is done to gain an understanding of your internal controls, performance during the period being audited and how it compares to expectations and industry standard along with and trends, variances and ratios.

Your auditor will request backup documentation including reconciliations, invoices, bank/loan statements, payroll reports, etc. to verify your financial information and the information to your auditor’s inquiries.

At the conclusion of the audit your auditor will review the audit report and your financial statements and go over any findings or recommendations. You may be provided with several items:

  • Proposed adjusting journal entries to correct misstatements.
  • Recommendations to improve internal controls and/or policies often increasing efficiency and effectiveness. 
  • Assistance drafting your financial statements.
  • Notice of upcoming changes to compliance or reporting requirements proposed by the FASB and IRS.

There are four basic steps to prepare for an audit: 

  • Implement a good system of internal controls and maintain your books and records throughout the audit period.
  • Prepare reconciliations for bank, investment, debt, payroll accounts and perform other closing procedures as necessary.
  • Investigate any unusual items:
    • Significant variances from prior year.
    • Significant variances from budget.
    • Unexpected trends.
  • Know your numbers- the more comfortable you are with your internal numbers the smoother the process will be.

Your auditor will provide you with a detailed list of information to have available based on preliminary work and inquiries to help you be prepared for the audit. 

Here is a list of items usually requested:

  • All formation and company documents (By-Laws, Articles of Incorporation, Certificate of Incorporation, Buy-Sell Agreement, Partnership Agreement, etc.)
  • List of ownership and board members, if any.
  • Policies and procedures manuals
  • Most recent audited, reviewed, or compiled financial statements (if available) and most recent tax return.
  • Board minutes for meetings held during the fiscal year through the end of fieldwork, including supplemental reports 
  • Access to or a back-up copy of your accounting software file for the fiscal year under audit
  • Bank statements and reconciliations for all cash, investment, and debt accounts (including months subsequent to year-end)
  • Listing of authorized check-signers
  • Supporting documentation for cash disbursements including canceled checks, approved invoices, general ledger reports, etc.
  • Supporting documentation for cash receipts including copies of bank deposits, remittance notices, etc.
  • Financing agreements or funding contracts with creditors, including lines of credit, and amortization schedules prepared 
  • Lease agreements
  • Depreciation schedules for capital assets 
  • Accounts receivable listing or aging schedule as of year-end
  • Accounts payable listing or aging schedule as of year-end
  • Access to personnel files, including salary and benefit agreements, and I-9 and W-4 forms.
  • Quarterly 941 forms, forms W-2 and W-3

Common Audit Questions for Not-for-Profits

There are two general ways to answer that question. Sometimes audits are required by lenders, investors, and grant obligations, which means, yes, you need an audit. If there is no actual requirement, there is still unparalleled value in preventative maintenance. An audit is a useful tool to review your cash flow, uncover any issues before they become a crisis, and learn from the guidance you receive from your auditor. Performing an audit gives you peace of mind that all is well with your company or organization so that you can focus on the cause or business that drives you. 

The short answer is, it’s possible. Here is a list of some reasons your nonprofit is required to be audited: 

  • Are you a State or federal funding recipient? Do you expend more than $750,000 of federal funds (including those passed through from other entities) annually? If so, your organization is required to have a uniform guidance audit in addition to a financial audit.
  • Most state and federal agencies that award contracts to provide services in the community require that contract recipients be subjected to an annual audit.
  • Private foundations often request that a nonprofit submit a copy of the nonprofit’s most recent audited financial statements in conjunction with a grant proposal.
  • Financial institutions will request audited financial statements prior to extending a loan or line of credit to assess liquidity and financial risk.
  • The audit will evaluate the internal control structure of your organization to identify weaknesses and reduce risk of material misstatement or noncompliance. 
  • Board members will receive insight into the financial health of the organization and management recommendations for methods to enhance financial transparency.

Questions, questions, and more questions! To gain an understanding of your organization, your auditor will need access to documents and personnel so that they can assess the internal controls your organization has implemented. This is your time to ask questions too. Given your auditor’s experience, it’s likely they’re familiar with your accounting software, reporting and compliance requirements, payroll service-provider, Excel headaches, you name it! Your auditor will help you make sense of financial reporting and determine the best option for your organization.

Your auditor will provide you with a detailed list of information to have available based on preliminary work and inquiries to help you be prepared for the audit. 

Here is a list of items usually requested:

  • Bylaws
  • List of board members and committee members
  • Policies and procedures manuals
  • General ledger detail and trial balance
  • Most recent audited, reviewed, or compiled financial statements (if available)
  • Board minutes for meetings held during the fiscal year through the end of fieldwork, including supplemental reports 
  • Access to or a back-up copy of your accounting software file for the fiscal year under audit
  • Bank statements and reconciliations for all cash, investment, and debt accounts (including the months subsequent to year-end)
  • Listing of authorized check-signers
  • As your organization evolves, so too should the policies and procedures relied upon to support operations. During an audit, your auditor will perform tests of your internal controls to assess levels of risk based on your transaction cycles (cash disbursements/receipts, payroll, investments, debt). As a result, opportunities to increase efficiency and effectiveness are identified. 
  • Be aware and take notice of upcoming changes to compliance or reporting requirements proposed by the FASB, federal or state agencies, or the IRS.
  • Be prepared to provide financial account information for bank accounts, including line(s) of credit, outstanding debt, and investments. Your auditor will use this information to confirm balances at year-end and, if applicable, test compliance with debt covenants imposed by creditors.