Preparing for an Effective Housing Audit
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As public government entities, housing authorities routinely experience housing audits from multiple funders and regulators. Going through an audit isn’t an enjoyable experience, but the better prepared you are — and the further in advance you prepare — the more you will decrease not only exposure to risk, but also the amount of time spent meeting auditor requests. To help you prepare for your next audit, below are some steps you should implement.
Respond to the Audit Notice
One of the most important (and painless) ways your authority can prepare for the housing audit? Promptly replying to the notice of audit. Set a positive tone with the auditing team from the start, to ensure an effective working relationship later. The letter sent to your authority should give details about what will be examined and what needs to be prepared.
Understand the Scope
After replying to the audit notice, the success of a housing audit will depend heavily on a housing authority’s understanding of both the scope of the audit and what materials need to be presented upon the auditor’s arrival.
You should expect your auditor to request, at a minimum, non-audited financial data, check number sequences and grant funds received by grant type. The auditors will review client files and policies and procedures.
Prepare Your Team
Once the scope is established, the key staff at your housing authority, who will handle the audit, should meet in advance to prepare. Your authority will be better prepared if the process and expectations are established prior to the auditor’s arrival. The team must designate not only a liaison, but also the key staff to assist the liaison in gathering information and answering questions.
Once the team is on the same page, the employees chosen to gather requested information should do so in a timely manner. Everything that will be given to an auditor should be reviewed by your compliance and finance teams. Communicate time commitments clearly and ensure level loading in workload takes place.
The audit process can demand much of your time, so make what ongoing preparations you can throughout the year. You should routinely review your footnotes throughout the year, which will save both time and stress during the audit.
Next, identify any major changes or issues that have taken place during the last year. Your authority should review its internal policy, procedures and processes to see if anything changed since the last audit. As an example, if payment standards changed since the last audit, make those changes clear to prevent misunderstandings.
Be sure to prepare any information about damaged buildings, new developments, refinanced deals and/or changes in ownership or partnerships. If a property within your portfolio experienced abnormal unit vacancies, you need to be ready to explain the reasons. Don’t wait to tell the story; instead, prepare a written document with supporting evidence. Collect all trial balances for properties — as well as the general ledger — and ensure their availability.
The pressures placed upon public housing authorities during an audit continue to increase. However, if you’re well-prepared and collaborate with your auditor, you will increase the likelihood of a successful outcome. While the auditing process isn’t completely painless, creating strong protocols for a housing audit helps you anticipate what the auditor may need at any given time – saving you time and allowing you to stay focused on your normal business operations.