A year-end financial audit is extremely important for your business for both monetary and legal reasons. Getting help from experienced professionals will make the process easier, but you can do your part by taking steps to prepare for it ahead of time.
Doing so will save you and auditors a lot of time and effort, which would then help reduce the costs of an audit. You can also reduce the chances of errors, which could reflect poorly on you and your business if the mistakes are discovered.
Planning the Annual Financial Audit
Preparing for your end of financial year audit will require some planning ahead. You need to have a good idea of what you will be doing, as well as what kinds of preparations you will need to make.
This is an important stage to consider due to the issue of time. Bigger and more complex businesses could take up to several months to prepare for an audit. Leaving such a time-consuming process to the last minute could cause unnecessary delays and costs.
With that being the case, it would be advised to get in touch with an auditor as soon as possible to establish a framework for the assessment. The goal is to get the ball rolling early so that any mistake or error can be found right away.
Keeping your records up to date is highly advised, as well. Making the necessary corrections to the data before the audit begins would make the process go faster.
Check Updated Accounting Standards
The standards and regulations pertaining to accounting and auditing go through regular updates. They need to be checked and followed in order to ensure that your financial activities are compliant.
Your team should be up to date with regard to the accounting standards in order to avoid the need for a complete revision of financial statements. If it is necessary to provide your accounting team with additional training, it would be beneficial for you to do so.
Review Past Audits
It’s important to get perspective when it comes to preparing for an end of year audit and this involves going over those done for previous years. Any mistakes, changes, or opportunities for improvements can help with your next audit. This would also help make you more familiar with your records so that you can talk to your auditor about them.
Throughout the years, your business and the regulations relevant to a company audit would have undergone changes. This includes expansions, onboarding staff, increasing budgets and expenses, or even government grants.
Outline Timetables and Delegate
Once you have gone through the previous steps outlined above, you will likely already have a better understanding of what needs to be done for your end of financial year audit. This will then allow you to create a timetable with regard to the auditing process itself.
You could also delegate tasks to qualified personnel so that they can prepare the necessary documentation. It’s important to have enough people working on this to meet the tight deadlines.
Gather the Appropriate Business Audit Documents
A major step in preparing to have your business audited is getting the right documentation in order. Among the most important of these would be:
- Fixed asset register
- Board meeting minutes
- Lease and contract copies
- Customer and invoice revenue details
- Payroll Register
- Aging reports of accounts receivables and accounts payable
- The final audit period trial balance
- Detailed accrued and prepaid expenses list
- Details regarding cash disbursements
- Inventory shipment/receipt records and inventory list
- Bank reconciliations
- The audit period’s complete general ledger
Auditors might request additional documentation for specific reasons. If so, you can provide those, along with the ones on this list. The goal is to reduce the amount of work and time spent on gathering the necessary documents once the auditing process begins in earnest.
Get Clarifications
It’s important that you have a solid grasp of what the process will involve with regard to your end of financial year audit. This will then necessitate asking questions and getting clarifications on matters that you don’t fully understand.
This does not apply only to topics that are pertinent to the audit. Asking for further details regarding requested documents and the information that the auditors need would be advisable, as well.
Be Available for Your Year End Audit
The auditing process for your end of year financial statements might require further participation from you. This may come in the form of questions and clarifications that your staff are unable to or are not permitted to answer.
Auditors will mostly have what they need via the documentation that you provide. During fieldwork, however, they might come across details that will require your input. As such, it would be better for all involved for you to provide the times when you are available to be contacted.
Conduct Self-Assessment
The last step to preparing for your end of financial year audit is to conduct a self-assessment with your staff. Once all necessary documents have been provided to the auditors and the fieldwork has been concluded, you will need to go over the process with your employees.
This will help prepare them to go through it all over again next year. You can get insights, feedback, and suggestions for making the process smoother and more efficient.
Conclusion
Properly preparing for your end of financial year audit will prevent many of the hassles, frustrations, and additional costs that come with the lack thereof. It only makes sense to get a head start on the process in order to ensure that it goes smoothly and gets done quickly. Taking the appropriate steps to prepare for the audit will also help catch any errors that could result in violations of accounting and auditing standards.
