Google SAS 104-115 and you will find mostly articles by us (Vibato) discussing the need for auditors to pay special attention to internal controls as part of their audit. Why? Because the AICPA & the PCAOB dictates standards that the auditors must adhere to in order to perform their audits. Parts of these requirements include reviewing your internal controls and this applies to ANY COMPANY THAT IS AUDITED – public, private, non-profit; it doesn’t matter. If you are audited, your auditors must look at your internal controls as part of your audit. If you do not have any documented internal controls then be prepared for a higher audit bill because your auditors will have to go looking for internal controls at your company on your dime year-over-year. Moreover, due to independence issues, they are not allowed to share their work with you to use going forward so they will do this work each year and all you will see for it is a higher bill. Period.

 Our friends at BPM sent us this alert today regarding an Accounting Standards Update (ASU) 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS and we felt our readers should know about this.  Here is a snippet:

The only way to get ahead of your accounting department's workload is to document your internal procedures and build your organization in a way that would allow for it to operate without you.  Now, a lot of people may be asking, "if I did that, what would the company need me for?"  That is just the kind of thinking that is holding you back.  On the contrary, if your organization is dependent on you, then it is also limited by your abilities and availability which may be why you are currently working so much and watching your personal life go by out of the window of your office.  Read the book "The E-Myth Revisited."  The accounting department is the transaction hub of any organization and it is essential that it operates as efficiently and effectively as possible to ensure the ability of your company to scale. Work hard on bridging the gaps between tribal knowledge and global, world-class thinking…and then you may be able to go play a little!  

Sarbanes-Oxley legislative rules dictate that audit-related documentation must be kept for 7 years.  To that end, when the question arises "should I keep this?" the answer is going to typically be yes.  Vibato recommends storing all of your internal audit documentation in a bankers box by year and marking on the outside with a Sharpie that the contents should not be destroyed before X year (X year equals this year + 7).