The Proactive Audit
Traditional audit starts from year end. It focuses on sample testing and is interruptive, delayed, costly, and creates little value. Proactive audit starts from year beginning. It focuses on developing the systems to tell the story of the organization both financially and non-financially. It provides ongoing support, and nutures a collaborative relationship.
JZ CPAs offers a new approach that significantly expands traditional process of auditing. We focus on the viability of the organization and an assessment of its ability to evaluate its past performance, determine its current strengths and weaknesses, and strategically plan for the future. Not limited to financial accounting, this auditing process recognizes that an organization's financial records are simply a reflection in financial terms of the multi-faceted governance, management and operations of the organization as a whole.
The result: a useful analysis of the health of the organization, and its potential to achieve success and positively impact its clients and the community through its services and products
The traditional financial audit has been mandated for recipients of the resources from investors and funders, but often the auditing process is staid and does not create trust in or added value to the organization. It is a document that due to its regulatory oversight, is limited to a carefully worded "Opinion" regarding the financial statements and "Notes" which are intended to illuminate the information contained therein.
We have successfully implemented a process, however, where the skilled auditor, who has experience with a variety of organizations and the financial and operational health of each, assesses the overall health of the organization. We look behind and beyond the financial statements to the business and financial management of the organization, including areas such as resource development and management, operational effectiveness, sufficient risk management and stategic planning. We comment candidly about strengths noted and issues that are potentially threatening.
Clients, investors, funders and the community thrive when three critical strengths are present in any organization:
Based on a clear justification of the need for their service or product, an organization's vision articulates how it intends to meet or exceed its clients' expectations, and defines the organization's unique, competitive advantage to accomplish this. We move beyond simple financial auditing toward evaluating the organization's success in doing this. We provide direct, useful assessment and recommendations to the organization's leadership.
The assets of the organization, seen as precious and essential resources, are analyzed to determine their actual financial value (both in terms of Generally Accepted Accounting Principles, but as importantly, in the context of rapidly changing opportunities and risks). Obligations and investments are reviewed in a broader context to determine any risk that investors or funders might have. Risk reduction and resource development are the ultimate goals, with the belief that when risk has been significantly reduced or eliminated, the organization is free to pursue its vision and raise the resources necessary to attain that vision.
Policies, systems and business practices are the core of our analysis. The organization's leadership is analyzed and is trusted to produce financial and other information that can be relied upon for decision-making. We specifically identify which of these aspects might pose a risk to the organization's continued existence and success, as well as the loss of its resources due to ineffective decisions.
HOW and WHO?
Our work is based on a mutual agreement between the organization and the our team. Our process is a year-round process. Leaders of the organization, employee team members, clients, suppliers, and community and industry leaders all contribute information and opinion. We rely heavily upon the commitment of the organization's leadership to transparency and faith in the organization's future.
We create and anually update a comprehensive organizational profile. Critical processes and policies are identified, and the environment in which the organization operates is analyzed to identify unforseen opportunities and possible negative developments for which the organization must prepare. This organizational profile defines the unique position the organization holds in the communities it serves. This profile also provides a basis for resource development and service or product enhancement.
We work with the organization to review past performance and current conditions. We are on-site at the organization periodically throughout the year, observing daily operations, regularly scheduled meetings and presentations, and representations made to clients that occur during the normal course of business. We review not only financial information and systems, but also information about the organization's services and products, to ensure that there is sufficient harmony between operations and data collection and reporting.
As well as the traditional financial audit, we go far beyond to include discussions of management effectiveness, key policies and procedures, and risks and opportunities present in the organization's operating environment.
WHEN and WHERE?
We can begin at any time, and our team brings a wealth of experience and knowledge about organizational development to the process. We adapt our methodology to incorporate key information revealed during our engagement, as well as changes that might occur in the organization while the process is underway. Our engagements therefore are never exactly the same from year to year, or across different organizations, but the key elements of our approach are always present.
Organizational success! Clients, investors, funders and the community are confident in the organization. The organization itself is able to use our work and our reports to seek new resources and inspire confidence by its clients, volunteers and employees in its ability to fulfill its promises and achieve its mission.