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How Your Business Can Get Ready for an Audit
8 November 2023
It’s unlikely you’ll jump for joy when you think about the prospect of an audit. The end of the financial year is already a busy time. Then you have to factor in an auditor (hopefully one of us) taking a detailed look into the inner financial workings of your business.
However, it doesn’t have to feel as demanding as it seems. Take our advice, and you can get ahead with preparations and ensure your audit is as seamless as possible.
draft reports early
If possible, draft your directors’ report, and if applicable, your strategic report, ahead of time. This will help avoid last-minute delays and ensure consistency with your final financial statements.
Don’t leave it too late to complete your reconciliations. All it will do is prolong the experience, and possibly make it more complex. We suggest asking your finance team to complete reconciliations on either a monthly or quarterly basis. By doing this, you’ll bide more time to fix any anomalies before the fun really begins and the audit kicks off.
address potential complications early
Let’s say someone in your team inputs an unusual transaction, and it’s something an auditor is going to query during an audit. Why wait until the end of the financial year to address it? If you know who will be conducting your audit, get in touch and give them all the information they need so you can find out all is hopefully fine from their perspective. It’s a great way to avoid trawling through months and months of documentation to explain what happened. Dealing with something while it’s fresh in your mind makes it that much easier to sort.
ask for the prepared-by-client list
You usually receive a prepared-by-client (PBC) list from your auditor just before they start their work for you. A PBC list is a request of business information and supporting documents, needed by your auditor to complete your audit.
It’s an extensive list, which includes:
- Trial balance
- Bank statements
- Inventory records
As you can probably imagine, such a long list can take a long time to compile. So if you request the PBC in advance, you can fulfil some of the requests early – in your year-end processes, for example. You’d avoid unnecessary duplicating work and also ensure you have everything ready when it’s required.
When you have the PBC, be sure to check it through. If there’s anything you don’t understand or need more clarity on, you can ask your auditor before they start the audit. Our auditors are more than happy to answer any questions you might have. In fact, talking to us ahead of schedule could help with identifying ways to make the process more efficient.
set aside time
Where you can, plan around your audit. Try and ensure key staff in your finance and accounting departments don’t have time off booked while the audit takes place. While the auditor carries out fieldwork you should try and keep their schedule as free as possible, too.
cash flow statements
Thoroughly check your cash flow statements. They often contain mistakes, such as misclassifying items between investing and financing, and failure to exclude non-cash transactions. Getting them right will save your auditor time in the long run.
Online accounting and invoicing software has made it a lot easier to document and correctly categorise files required for audit preparation. And all this automation lightens the load for your finance department. It’s very handy to store documents digitally – scanning them and uploading to cloud software means your information is a lot more accessible than it would be stuffed into a filing cabinet.
use fortus for audit & assurance
One of the best ways to ensure you have as painless an audit process as possible is to choose the right auditors – us! We’ve a wealth of experience in financial reporting for a diverse range of industries.
Call us on 0330 162 4389, or click the link below to mail us, and we’ll set the ball rolling.