ForConstructionPros.com

It's December and you can almost smell the smoke from the computers and printers as the accounting department once again gears up for the year-end audit. Hopefully by now, you have met with the auditors; decided what items need to be verified with a physical inventory (if any); scheduled any physical inventory in October or November; sent out confirmations; and have a final list of schedules required to complete the audit. There is nothing like getting an early start where the year-end audit is concerned!

It is quite clear that the audit process is getting more and more complicated, takes more time, requires more internal staff time and is generating annual fee increases that parallel health care costs. It is becoming a real problem that will take some thought and effort to get under control.

It is also quite clear that part of the problem is the lack of continuity and experience the audit team brings to the table. As the accounting pendulum swings, the industry is experiencing a shortage of accountants willing to work in the public accounting environment. Consequently, most of the field staff is light on experience and tends to do more work then may be necessary.

The experience issue works both ways. Public accountants lack proper experience to make sound audit judgments, and the internal staff lacks the experience to challenge what the auditors want to do. As a result, more time is spent on audits on both sides that could be reduced with proper planning and input from the audit partner and CFO.

Even if you cull down the audit steps, the schedules and footnote disclosures required for today's audit put a tremendous burden on internal staff — to the point where what they produce, in many cases, has to be reworked by the CPAs, thus reversing any expected gains from the additional planning. It's really a Catch-22.