Preparation for end of financial year auditing is often a stressful time for councils across Australia, but it doesn’t have to be, writes Bhavin Shah.
This end of financial year is no exception. In fact, it may be even more tumultuous. The Covid threat remains, and the country has seen many natural disasters this year compared to previous years. A new government and new policies for climate change, net zero by 2050 and steps towards sustainable asset management will add to the EoFY related task.
Ideally, end of financial year planning should start from 1 July and be meticulously maintained throughout the year, however sometimes this process is overlooked as more pressing issues arise over the course of the year.
Below, I’ve outlined some suggestions and recommendations that can be considered to reduce end of financial year planning stress and create greater efficiencies across departments.
Educate stakeholders on the broader objectives
The key to a more cohesive auditing process is to engage all levels of council – especially between engineering and accounting departments. We like to call this “Accountneering” where engineers and accountants work hand in glove to create greater efficiencies.
Financial year information is reliant on the engineering team supplying the data in a timely fashion to the accounts team, but often there is a disconnect which can create problems closer to audit time.
Therefore, by engaging the two departments early to align on timeframes and objectives this can lead to a more cohesive and streamlined reconciliation process.
Close the financial year earlier than 30 June
This technique can effectively remove stress for the accounts team. By closing the financial year earlier than 30 June it allows councils the time to reconcile data, pay invoices and maintain books before the auditing process commences.
This works effectively when suppliers and stakeholders are given enough notice to understand the change of process. It’s imperative that the new timelines are shared and agreed upon by both the council and external stakeholders to avoid confusion or interruptions that could potentially strain relationships.
It’s particularly helpful for larger councils with higher reconciliation requirements. In some cases, through integrating this process it’s no longer taboo or impossible to take leave during the end of the financial year period.
Making it easy to meet your financial requirements
A stitch in time saves nine and councils should aim to keep asset registers current and maintained throughout the year to avoid the last-minute scramble. However, if this proves impossible there are programs and solutions available to support a truncated timeline to ensure councils meet their financial obligations with minimal stress.
Embrace technology for greater efficiency
Implementing and utilising technology is a great way to create greater efficiency and capability as part of a best practice asset management program – especially when preparing for an end of financial year audit. Seeking innovative solutions removes some of the labour intensive tasks and helps to streamline processes more efficiently. Auditors are looking for science-based evidence and AI and smart tools can provide it. Using Cloud enabled Enterprise Asset Management System (EAM) can provide more accuracies.
It is important employees are educated on the latest features and processes of the technology to ensure the best chance of success with the asset management program. Employees should be adequately trained in using the technology that has been implemented but also in the asset management processes to align on the greater strategic direction.
Standardise auditing practices
At a higher level, it would be helpful to create a standardised audit practice to avoid unnecessary discrepancies. Legislation is based on Australian accounting standards yet 90% of the inputs are engineering related, so unless the engineering and accounts departments work together there will never be a complete reconciliation.
By using two different systems to try and reconcile information it creates unnecessary pressure on both departments and consistently delivers variances that can become a problem for the auditing process.
*Bhavin Shah is a trained civil and irrigation and water management engineer and Associate director of client services at Brightly.
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