The National List of Attorneys - Audit Preparedness
The article below was published in The National List of Attorneys July 2012 Quarterly eNewsletter
Audit Preparedness
by Tina Thomas, Legal Recovery Network Performance Manager with Asset Acceptance Recovery Services, LLC
Client audits are more frequent and more thorough than ever before. Audits can consist of strictly a financial review, a compliance review (inclusive of data security safeguards), an operational review or a combination of all.Preparation for a client audit can be daunting, especially if it is your first time being audited or the first time for this particular client. Even veterans of the audit process sweat a little.
Unless there are critical issues that have arisen and there is concern on the part of the client, most auditors will give a three to four week lead time in scheduling the audit, which should give you ample time to begin preparation for the actual audit. Usually a high level meeting is conducted to discuss the scope of the audit, the information that should be provided prior to the commencement of the audit and the information that will be expected at the time of the audit.
Once the audit dates are announced, and after the high level meeting is conducted, it is time to begin reviewing your documentation. Some requirements may be found in the contract between the client and the law firm. You should review the contract and any work standards, along with past audits, to determine that everything is functioning as it should.
Unless there are critical issues that have arisen and there is concern on the part of the client, most auditors will give a three to four week lead time in scheduling the audit, which should give you ample time to begin preparation for the actual audit. Usually a high level meeting is conducted to discuss the scope of the audit, the information that should be provided prior to the commencement of the audit and the information that will be expected at the time of the audit.
Once the audit dates are announced, and after the high level meeting is conducted, it is time to begin reviewing your documentation. Some requirements may be found in the contract between the client and the law firm. You should review the contract and any work standards, along with past audits, to determine that everything is functioning as it should.
Develop an internal checklist to ensure that all requirements have been reviewed. If you find areas that may be non-compliant, you can document that the process was tested, a deviation was found and a correction was put into place. A major component of audit preparedness is to perform a self-audit, as if you were the client. This allows you to find gaps in processes or areas that need to be documented. Being proactive shows a client that you are continually making improvements.
As you begin receiving requests for information from the auditing entity, that is the time to develop the binders that you will present to the client. There is no magic to putting together the binder. You certainly should ask the client how they want the binder compiled, but as long as all the requested information is there, the client can arrange it to suit their purposes.
It is important that every process and procedure is documented. If not, a deviation from the standard policy could lead to further deviations that might become an audit issue. If you have non-conforming processes, they may lead to further auditing and fines or penalties and violations of State and Federal regulations. Showing the client that your processes are documented and providing a copy of the Policies and Procedures is a great addition to the audit binder.
“Compliance” and “data security” are the buzzwords we hear every day, because the Consumer Financial Protection Bureau has extended its supervision and examination to larger market participants’ vendors. Even though many of your accounts may be older, you must secure the consumer information, just as if it were a new account in your office. If you always adhere to industry best practices, then you will likely be covered for any contingency.
Once the audit has been completed, everyone wants a good outcome. However, if there were deficiencies, what do you do next? The audit team will usually conduct a post-audit review and discuss the findings. There may be a requirement that you provide additional information within a reasonable time frame to complete the audit and have a good outcome, or the deficiencies may be severe enough that there is nothing you can do except learn from the audit and fix the issues identified.
Most auditors review audit requirements on a regular basis. If an item is uncovered during an audit, it will be added to the audit checklist for future audits. Be proactive and ask your clients if there are new areas that they are monitoring.
Following these tips can help you be prepared the next time a client utters the word “Audit.”
About the author
Tina Thomas is the Legal Recovery Network Performance Manager with Asset Acceptance Recovery Services, LLC. Tina brings more than 15 years of credit and collection experience, account management, client service, and business development experience to her position having previously worked for Paragon Way and General Revenue Corporation. Prior to joining Asset Acceptance, Tina's role as a consultant focused on providing her clients with project management, internal auditing, streamlining procedures, refining processes, compliance and financial management. Tina has built a reputation of working together with the attorneys as a partner and not just as a client.