A Foolproof Plan for a Painless Credit Union Audit

When you are going through your annual audit, do you ever feel stressed out? If you just answered yes, you are in the majority.

I remember when I worked for another company as the manager that oversaw all the daily paperwork. As I went through my own audits, I would be a worried mess wondering, “Do I have all the information the auditors will need? I wonder what they will ask for. Will they ask me questions? Oh my, what if they ask me questions?” 

Before you start your pre-audit insomnia and anxiety-filled worried nights, remember to breathe. This is when open communication with your audit team comes in handy.  

Although audits can be stressful, preparing and planning can transform your experience. 

Plan Ahead

First, request a list ahead of time of the items your audit team is planning on reviewing during their visit, but stay flexible regarding additional information the auditors may request while onsite. Pull out prior reviews and see what the auditors reviewed last year. Odds are they will want the same information this year.  

Start planning now instead of waiting for the list to come to you. One thing that every auditor will ask for is some type of documentation that supports the month-end balance for every general ledger account. That supporting documentation could be a reconciliation that shows what makes up the outstanding balance or if the balance is made up of one item, a statement or system report that supports the balance. It could also be a subsidiary ledger or even general ledger history.

Do yourself a favor—at the end of every month, print out your general ledger trial balance with all your account balances. Then obtain supporting documentation for each account. For example, to support your loan accounts balances, print the last page of your loan/share trial balance that shows your loan totals. When it comes to your bank account general ledger balance, print your reconciliation and statement. Make sure every account that has a balance has its own supporting page. Do this for every month-end.

Use Electronic Files

To save storage and make your month-end packet more accessible, scan and save the packet to your hard drive. When you auditor comes in, hand them that month-end packet, either in paper form or electronically, for the audit period. If you have the following month completed, give that to your auditor as well so they can see if outstanding items have cleared.  

You will be amazed how smoothly your audit will go if you follow these steps, and how much more quickly those pesky auditors will be out of your hair. You will spend less time pulling documents, answering questions or worrying if you will have what the auditors want. You will have the confidence that every account can be supported, and in doing this process, you’ll be much more likely to catch and correct errors before your auditors even arrive. Another helpful tip is to ask your auditors questions during your audit.  

Friend or Foe?

Auditors have long been labeled as the enemy, and to tell you the truth, before I became one, I would have agreed. However, I have seen the error in my ways. Auditors are there to help. Trust me, we would prefer nothing more than a nice clean, no need to write up anything report. Those require a lot less typing.

But in all seriousness, most auditors care about their clients and their main objective should be help make improvements that will better serve their clients. This can be anything from finding a posting error and correcting it to making recommendation to enhance internal controls. Errors will happen, we are human, but it is what we do about them that matters. 

If an error is discovered, work with your auditor to determine what caused the error, how could the problem have been detected or prevented earlier, and how can it now be properly corrected. Even if no errors are found, but you have been struggling with an issue, ask your auditor. They might just have a solution you have not considered.

So get prepared early, get a detailed listed beforehand and get your list of questions you have always wanted to ask your auditor compiled. This way, next time you look at your calendar and see that annual audit week circled, instead of thinking “Oh great, here they come again to stress me out!” You can think, “Great!  Here they come again to help me out.”