How an Association Management Company Can Lower your Audit Fees
A small- or medium-sized stand-alone organization might have only a single unsupervised bookkeeper or accountant on staff. But many AMCs have a large staff of accountants or bookkeepers with an accounting manager or even a controller supervising the workflow. In the latter case, the cost of the financial function is shared among multiple AMC clients, providing an excellent value to the organization.
It is highly recommended that an association have an annual independent audit. An audit can provide verification to the membership — and to potential members — that financial integrity is very important to the organization. However, the cost of an audit can be quite high. The following conditions will generally raise the cost of an audit to an association:
- Sloppy record-keeping, which requires the auditor to make several adjustments at year-end
- Poor segregation of financial duties within the organization because of a limited number of financial personnel
- A lack of competent financial management on staff
- A lack of financial operating procedures in written form
- Turnover of financial staff
What a Difference AMC Makes
An AMC with a competent financial staff can address all of these issues that can add unnecessary cost to the audit. When working with an AMC, the following factors come into play:
- Bookkeepers that are well trained and supervised ensure that a clean set of records is available to audit.
- The availability of personnel allows for the segregation of duties in key functions such as cash receipts, cash disbursements, and account reconciliation.
- Management-level financial personnel supervise staff, thus ensuring the records are accurate and that issues are properly addressed in the financial statements.
- Written operating procedures ensure consistent accounting methodology.
- Turnover in a one-person financial staff means that there is a high risk of errors occurring, and turnover can disrupt the operations of the organization. Turnover in a well-trained and organized finance department can be handled without disruption.
- Organizations that can address these issues provide the auditor with a low-risk environment to perform the audit and a set of records requiring few adjustments. Those conditions result in the lowest possible audit fee. Many AMCs can provide this benefit to a client at a reasonable cost, perhaps less than they are paying as a stand-alone organization.