The association is required to provide all the financial records of the association to the auditor. All records should be complete.
Auditing practice identifies any material that is omitted or not disclosed as a misstatement if it would have influenced the auditor’s judgement.
What if the audit report is unsatisfactory?
There is always the possibility that the auditor may present an unfavourable report, identifying areas that the association needs to address.
If the association is not clear about what the auditor is saying, it should ask for further written clarification. In presenting the audit report and findings to the AGM, the management committee should report on the auditor's recommendations and what action has been undertaken to address areas of concern. To ignore an auditor's report is likely to place the association at risk and increase the exposure of individuals (particularly, the committee) to personal liability.
It may be that there are irregularities in the financial statements of the association, due to a number of factors, such as:
- a lack of understanding in preparing financial statements;
- a lack of understanding in assessing financial statements;
- poor controls over money in and out; or
If problems suggesting dishonesty are found in the financial records, the association should obtain prompt legal advice and attend to any immediate matters such as freezing accounts, securing assets, investigation, contacting the police and/or the insurer.