Audit

From PCSAR

The audit of the books is done once a year prior to the Annual General Meeting.

The auditors are two members of general membership, preferably not members of the board. They are appointed to the position for one year by the membership at a general meeting and report to the membership.

Preparing for the audit

Prior to the audit, the following information should be provided to the auditors:

• a copy of the current year's financial statements including
  • balance sheet
  • statement of income and expense
• the year-end bank statement for all accounts
• the bank reconciliation statement
• a list of all transactions for the year (e.g. General Ledger report)
• a copy of the most recent inventory
• a copy of the previous year's financial statements
• the authorization to spend, which would be either
  • a copy of the current year's budget
    • plus a copy of the minutes adopting the budget and authorizing expenditure limits
    • and any minutes authorizing expenditures over the budget
  • or, a copy of all minutes for the year
• a copy of the previous year's auditors' statement

During the audit

During the audit, the two auditors meet with the book keeper with all the financial records.

Together they verify that:

• the current year's balance sheet balances
• the totals of the income and expense sheet add up
• the difference between the current year's and previous year's balance sheet is the difference of the current year's income and expense
• the bank reconciliation statement matches the bank statement
• all expenditures are authorized by either the budget or board meeting motion

The auditors will probe certain transactions, asking to see the paperwork associated with them. These transactions should include:

• any transactions in the transaction list that seem odd.
• transactions in the bank reconciliation statement that are unusually old.
• a few random transactions

The auditors will review the previous year's auditors' report and check to see whether any of the concerns listed there should also be mentioned in the current year's report.

If there are concerns for the current year, the auditors will discuss with the book keeper whether the concerns can be addressed. If so, the auditors can reconvene after any additional information or changes has been provided.

After reviewing the books, the auditors will prepare an auditors' statement. The auditors' statement will state whether they believe the current year's financial statements substantially reflects the financial state of the society. If there are any outstanding reservations or concerns the auditors' statement should include those.

The auditor's statement should be signed by both auditors.

After the audit

A copy of the auditors' statement should be given to the book keeper and the board. Prior to the annual general meeting, the auditors' statement should be sent to all members of the society.