Financial year-end audit preparation

SAAF Education, a supplier on the CPC Financial Services Framework, has provided a series of helpful tips for multi-academy trusts preparing for their year-end audit.

Have a solid month-end process

Having a strong month-end process is crucial for the smooth running of academy trusts. Preparing throughout the year makes year-end much easier and almost becomes just another month-end. A regimented monthly close down process should be put in place and implemented across multi-academy trusts to ensure consistency. A successful month-end close down should utilise a structured timetable that highlights key roles and responsibilities. Having centralised bank accounts can also help to improve control and efficiency across a MAT.

Understand your balance sheet

It is important to ensure that you have a full understanding of the numbers on your balance sheet and that nothing is missing or inaccurate.  The balances on all control codes, for example, withdrawals, pre-payments and aged debtors and creditors need to be understood. If numbers are inaccurate or underreported, strategic decisions could be made based on an incorrect position. Ensuring that the balance sheet is reconciled each month will highlight issues that need to be amended.

Internal scrutiny

Auditors will look at internal audit reports to see if weaknesses are resolved. There should be a high level of risk-based internal scrutiny of the day-to-day and month-to-month finances. However, once all the controls are in place and working correctly, it is not necessary to continuously test things as long as you have a regimented close down process in place with people signing off items as accurate each month.

Speak to your auditors

Speak to your auditors, they are there to advise you and should be able to review your current position. SAAF offer a complimentary health check and will ensure that your balance sheet is accurate, that your system is providing you with the correct numbers and that there are no fundamental issues with the software.

3 Common mistakes

1.   Bank reconciliations

A common mistake that auditors see is bank reconciliations that do not match. It is important that the bank statement balance on the system is the same as the balance at the bank so that nothing is missed on the system.

2.   Processing invoices and expenses

Failing to process invoices and direct debit expenses in time, or processing one side of the transaction and not the other are common mistakes. It is important that all invoices are on the balance sheet even if they are not paid, to ensure you have an accurate position.

3.   Year-end balances  

When year-end balances are not brought forward correctly, it can have a huge impact on the numbers that are being presented to trustees. This is most likely caused by a lack of understanding which is why it is important to speak to your auditors.

SAAF Education has provided downloadable checklists for both month-end and year-end processes, containing every element that is important to ensure success. Utilising these lists will ensure a rigorous close down process and help to maintain consistency across trusts. 

To find out more about the framework click here.