Magazine article The CPA Journal

Tips for Making Audits More Valuable for the Client and the Firm

Magazine article The CPA Journal

Tips for Making Audits More Valuable for the Client and the Firm

Article excerpt

An audit is an audit is an audit" is no longer an acceptable concept to any of the parties to the process. Both the firms and their clients are looking for added value.

Adding Value to the Audit

To make an audit a value-added service, the audit staff must be alert while performing audit procedures for ways the client can improve its operations. An objective view of operations may result in suggestions for improvement previously overlooked by the client. Sometimes, the more obvious improvements are the ones the client will value the most. Examples of comments for improving operations or administration include the following:

Vendor invoices should not be paid before their due date (unless taking advantage of cash discounts) and available cash should be temporarily invested in interest bearing accounts.

Low cost maintenance inventories should be expensed when purchased to avoid the cost and trouble of accounting for them as prepaid expenses.

Maintenance histories should be kept to help identify unreliable or high maintenance equipment that may need replacing.

Fast-moving finished goods inventory should be stored near the shipping area to minimize retrieval time and forklift usage.

Discounts and other concessions should be considered to increase customer order volume and to maximize overall rates of return.

Standardized forms should be developed to document recurring routine journal entries and transactions.

Collection efforts should be continued even after accounts have been written off. Management should consider the cost/benefit of using collection agencies for this task.

Large quantities of scrap material stored throughout the warehouse should be segregated from other inventory. Scrap should be sold periodically on the basis of competitive bids. This will reduce the cost of warehousing scrap inventory.

Identifying Additional Services

To identify additional service opportunities, it is important to educate audit staff about the various types of services the firm can provide and then instruct staff to be aware of client needs and look for opportunities to provide additional services during the audit. The following are examples of things audit staff might consider when looking for new areas of potential service:

Does the client's bookkeeping/accounting system meet its needs?

Would an outside payroll service be beneficial to the client?

Is the client getting meaningful interim financial statements? …

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