With most credit unions’ financial year end fast approaching we take a look at preparing for your year end.
Focus of the auditor
The role of the auditor is to carry out a check of your year end accounts in accordance with international auditing standards. They will be mainly checking whether the accounts give a true and fair view and whether they have been prepared in accordance with accounting standards and legislation.
Going concern will be another focus of the auditor. They will look at the credit unions’ assessment of whether the credit union can carry on for 12 months from the date of signing. With many credit unions struggling with capital requirements, Brexit and rising bad debt costs across the sector, this assessment will be particularly important. During their review the auditor will consider your financial results, budgets and regulatory correspondence.
Auditors should provide you with a list of the information that they require. The list will depend on your arrangements with your auditor. If you don’t receive one it’s worth speaking to them to ensure you have all the information they require. Delays in providing your auditor with information will delay when your year end accounts will be ready.
For credit unions carry who do not prepare daily bank reconciliations it is important these are carried out reconciling the year end nominal to the year end statement balance. If you don’t have a reconciliation at the year end it will lead to additional work and possibly cost from your auditor. Year end cash counts are particularly important as well.
It is vital that your transactions on your system are up to date before your year end process. Bad debts to be written off should be done so before the year end and before running year end arrears reports to avoid double counting. It is also useful to chase up suppliers in September to ensure you have invoices for services/goods incurred before the year end.
Certain reports can only be run at the year end. Reports involving interest are the main example of this with reports including the year end accrued interest, delinquency reports and interest earned reports usually not being able to be reproduced if not run at the year end. It is therefore important these reports are produced at the end of day on your year end.
A year end back up is critical for a number of reasons. If any reports are missed they could be reproduced from the backup. It also means that if there is mispostings or corruption after the year end then you have a set of records that still can be audited.
Systems such as Curtains let you post nominal and member transactions on different days. This can lead to records not matching especially at the year end if the member posting is done in one year and the nominal posting in another. This should be avoided where possible or a record taken of these transactions to aid reconciliation of the year end balances.