02 Jan 2016

Ace your 2016 Audit: Top 10 Trends

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Using the reports of top audit findings over the last three fiscal years, we’ve compiled a list of the top 10 audit trends. This year, ace your audits by being aware of these top audit issues, and use the tips provided in this article to correct those common errors by using the tools provided in your BMS software.

For each item on our list, we’ve included keywords that you can use to search HelpLink,* our online help file, where you can find more detailed instructions about how to use the features in CaseLink to help you ace your next audit with flying colors!

*To access HelpLink, the online help file for CaseLink users, you must first log into your BMS software.

  • CaseLink Office users: select “Help” from the top navigation, then “CaseLink Help.”
  • CaseLink² users: select the question mark icon on the top right corner of the top navigation.

1. Scheduled assets on Form 1 do not match petition or schedules.

The No. 1 finding three years in a row! Auditors and Field Examiners find that the assets listed on Form 1 often do not match those on the debtor’s schedules, are not updated for amendments, and do not reflect the current status of case administration.

Luckily, CaseLink users have many tools at their disposal to detect Form 1 and asset reporting errors, such as the Auditor Tool which tests your case data, links you to the issue for correction and offers additional functionality for follow-up and tracking.

In addition, after preparing your Form 1, you should manually check an overview of your assets to make sure they match, which you can do in the Initial & Latest Value Assets screen in CaseLink Office or the Asset Overview screen in CaseLink².

  • Keywords to search in HelpLink for CaseLink Office users: Auditor; Prepare Form 1; Track Initial & Latest Value Assets
  • Keywords to search in HelpLink for CaseLink² users: Auditor; UST Forms; Asset Overview

2. Bank accounts not timely or properly reconciled or reviewed.

The second most frequent issue found by auditors and field examiners is that bank reconciliations are often not properly documented or prepared in a timely fashion. In fact, this is so frequent that it has been a top trend among audits for nearly a decade!

The Bank Reconciliation feature in CaseLink allows you to ensure that your bank accounts are reconciled and reviewed properly each and every month. This feature streamlines the monthly reconciliation process between the ledger activity in CaseLink and the records at the bank.

  • Keywords to search in HelpLink: Bank Reconciliation

3. Repeat findings/prior deficiencies not corrected.

Each year, more than 50 percent of audits and field exams show that at least one previously reported finding was not corrected as promised, or recurred in the next audit or exam.

Use the Auditor Tool in CaseLink to correct the findings that are brought to light in an audit. Alternatively, CaseLink Office users can use Snapshots and CaseLink Web users can use Custom Queries to find specific cases that meet a specific condition and correct the issues in a timely manner.

  • Keywords to search in HelpLink for CaseLink Office users: Auditor; Snapshots
  • Keywords to search in HelpLink for CaseLink Web users: Auditor; Custom Queries

4. Asset values not verified or reasonably determined.

Some of the most common types of cases reviewed by auditors include cases with a large amount of assets, which are naturally susceptible to errors in asset reporting. This particular finding has increasingly risen in the rankings in recent years.

In CaseLink, one of the most handy tools to correct this error is the Asset Verification tool, which allows the user to review assets in cases that have not been locked down or marked as verified, and batch correct any errors.

  • Keyword to search in HelpLink: Verify

5. Inaccurate Uniform Transaction Codes.

Another common finding in audits and field exams is the use of incorrect Uniform Transaction Codes (UTCs). UTCs allow Chapter 7 offices to establish consistent accounting and reporting, and consist of seven digits and three parts: the Primary Code, the Sub Code, and the Wildcard.

In CaseLink, you can easily view all EOUST-defined Uniform Transaction Codes and identify any errors with the Ledger Category Report in CaseLink Office or the Uniform Transaction Code Report in CaseLink² . Be sure to ask your UST if you’re unsure of which UTC to use.

  • Keywords to search in HelpLink for CaseLink Office users: Ledger Category Report
  • Keywords to search in HelpLink for CaseLink Web users: Uniform Transaction Code Report

6. Asset status not accurately reflected and tracked on Form 1.

To avoid this finding, it is a good idea to compare the assets listed in your software with what is listed on the schedules to make sure they are accurate. To view a complete listing of your assets, access the Asset Report in CaseLink Office and CaseLink². CaseLink allows you to adjust the status of each asset as it gets administered. Remember to update the status as you work through a case.

Your Form 1 (as well as Forms 2 and 3) gets generated directly from within CaseLink Office and CaseLink². If your asset statuses are updated properly in the software then your Form 1 won’t have any issues for the auditors to catch.

  • Keywords to search in HelpLink for CaseLink Office users: Asset Report; Prepare Form 1
  • Keywords to search in HelpLink for CaseLink² users: Asset Report; UST Forms

7. Unscheduled assets not recorded or properly identified on Form 1.

Unscheduled assets can be tricky to record correctly, but luckily CaseLink can help you easily see whether an asset is marked as scheduled or unscheduled. A different set of UTC codes is used when marking assets as unscheduled and the Form 1 will automatically be populated with a “(u)” after the asset description. A good rule of thumb is that every asset not listed on the debtor’s originally filed schedules should be marked with the “(u)”. You can see a list of the UTC codes from the Ledger Category Report in Caselink Office and the Uniform Transaction Code Report in Caselink Web.

  • Keywords to search in HelpLink for CaseLink Office users: Ledger Category Report
  • Keywords to search in HelpLink for CaseLink Web users: Uniform Transaction Code Report

8. Non-compliance with DSO noticing guidelines.

A Domestic Support Obligation (DSO) letter is required to be sent to the person who is owed support payments as well as the State child support enforcement agency at two specific points in time during the life cycle of a case. The initial letter is to be sent no later than 3 days after conducting the first 341(a) meeting, and a second letter needs to be sent when the debtor’s discharge is granted.

Caselink has alerts to notify you when you need to send DSO letters for a particular case, and the letters are system-generated. Learn more about this functionality in Caselink Office and CaseLink² .

  • Keywords to search in HelpLink for CaseLink Office users: Generate DSO Letters
  • Keywords to search in HelpLink for CaseLink² users: Print DSO Letters

9. Miscellaneous Form 1 errors.

In addition to asset errors found on Form 1, there are numerous other areas where Form 1 can be recorded inaccurately and thus marked incorrect on your audit report. If you are preparing your Form 1 and using the Auditor tool in CaseLink Office or CaseLink², these errors will likely be brought to your attention automatically by the system. However, it is a good rule of thumb to review the form manually against the guidelines in the Chapter 7 Handbook to catch any errors based on the unique aspects of each case.

  • Keywords to search in HelpLink for CaseLink Office users: Prepare Form 1; Auditor
  • Keywords to search in HelpLink for CaseLink² users: UST Forms; Auditor

10. Description is not recorded or inaccurately recorded on Form 2.

You can make sure your transaction descriptions are recorded correctly by reviewing the ledger for each account in CaseLink. These descriptions can be edited directly in CaseLink so that the data prints correctly on Form 2.

  • Keyword to search in HelpLink: Ledger

If you need additional assistance as you prepare for an audit, please contact your BMS Account Manager. Each is experienced with audit practices across various regions and can help guide your office with tips and best practices—just another part of the BMS Advantage.