December 21, 2011
By Salvatore Armao

As the end of the year quickly approaches and everyone is thinking about the upcoming holiday season, Funds Administrators, Chief Financial Officers and Controllers should be starting their preparation for their annual financial statement audit conducted by their Independent Certified Public Accountants. Proper planning is crucial to ensure a quick and efficient audit with minimum disruption to you and your staff and your daily routine.

Well before the end of your fiscal year, coordinate a meeting over the phone or in person with your independent auditor to plan for the audit. You should determine the dates of the auditor’s fieldwork, and agree on a projected completion dates for the financial statements as well as the annual Forms 5500 and 990. Identify which confirmation letters will need to be prepared for the auditors and when they will be needed. Obtain a list of schedules and any account analysis that will be prepared by your staff and in what format. Also, make sure that the audit team has an adequate workspace with access to the Internet.

Additionally, you should communicate with third parties who provide information that the auditors will need, such as actuarial reports, custodian reports, SSAE 16 Reports (formerly SAS 70 Reports), investment managers’ calculation of indirect compensation and the classification of any alternative investments.

After the year end and before the audit fieldwork is scheduled to begin, make sure that all your internal record keeping is current, obtain an instruction letter from the auditor detailing what records and documentation they will need when they arrive. Providing information in electronic format wherever feasible will also speed things up. Also provide the auditors with any new contracts or agreements that were executed during the year being audited and disclose any changes on the Board of Trustees.

Finally, be sure to communicate with your staff about the timing and documentation requirements for the audit and delegate responsibilities to individual staff members to provide the necessary auditor information.

To save a little time with the preparation of your annual, Form 990 obtain the question pages from the form in advance and answer them prior to completion of the audit fieldwork. The IRS has added many new questions to the form in the last two years, in addition to the more subtle changes that usually occur each year. It will save a lot of time if you give the completed pages to the auditor before he begins the preparation of the form. Planning is the key to having a timely and efficient audit. Call your auditor today to schedule a meeting or a teleconference.

For over 25 years, Armao, Costa & Ricciardi, CPAs, has been committed to providing accounting, auditing, tax, financial and wealth management and advisory services to labor unions and employee benefit funds. Visit us at or call (516) 256-3200


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