How to Prepare for an Audit: A Practical Guide for UK Businesses

For many UK businesses, an audit is seen primarily as a compliance requirement – something to be completed once a year and then put to one side. In reality, an audit is a significant process that benefits from early planning, clear communication and good preparation. When managed well, it can provide valuable assurance to directors, shareholders, lenders and other stakeholders, while minimising disruption to the business.

This article sets out a practical, step-by-step guide to preparing for an audit, from identifying whether an audit is required, through appointing an audit firm, to ensuring your business is fully prepared for the audit itself.

Identifying if an audit is required

The starting point for any business is understanding whether an audit is required at all.

Many businesses first encounter audit requirements during periods of growth, acquisitions or overseas expansion, making early professional advice particularly important where group structures or reporting obligations become more complex.

For many companies, the requirement will be statutory. Under the Companies Act 2006, a UK company will generally require a statutory audit if it exceeds at least two of the following thresholds for financial periods starting on or after 6 April 2025:

• Turnover of more than £15 million (up from £10.2m)
• Gross assets of more than £7.5 million (up from £5.1m)
• More than 50 employees

Where a company is part of a group, group size and structure can also affect whether an audit exemption is available.

However, audits are not limited to statutory requirements. Many businesses, particularly fast-growing companies and UK subsidiaries of overseas groups, are required, or choose, to have an audit for non-statutory reasons, including:

• Requirements imposed by banks or other lenders
• Shareholder or investor expectations
• Group reporting requirements
• Regulatory obligations
• Preparation for a sale, acquisition or investment

Identifying the need for an audit early is essential. Late recognition can result in rushed decisions, limited auditor availability, and unnecessary pressure on finance teams.

Deciding to go out to tender

Once an audit requirement has been identified, the next consideration is how to appoint an audit firm.

In some cases, a business may already have an auditor in place. In others, particularly where there has been growth, a change in ownership, or concerns around independence or service levels, a tender process may be appropriate. Certain organisations, such as those with audit committees or external stakeholders, may also be required to undertake a formal tender periodically.

Before putting an audit out to tender, it is important to consider:

• Whether an audit tender is mandatory or voluntary
• The scope of the audit (statutory only, or additional reporting requirements)
• The expected audit timetable and reporting deadlines
• Any particular complexities within the business

Taking time to plan this stage ensures that the audit tender process is efficient, and that proposals received from audit firms are meaningful and comparable.

Preparing for the audit tender process

Effective audit tenders are built on good information.

Before approaching audit firms, businesses should prepare a clear overview of their operations, including:

• Legal and group structure
• Nature of the business and principal activities
• Key financial information (recent accounts, budgets, forecasts)
• Areas of complexity or judgement (for example, revenue recognition or valuations)
• Any recent or anticipated changes, such as acquisitions or system implementations

Audit firms will typically use this information to assess audit risk, resource requirements and fee levels. Providing accurate and complete information at this stage reduces the risk of unexpected fee increases or timetable challenges later in the process.

Going out to tender and selecting an audit firm

Businesses operating across multiple entities, international groups or regulated sectors often require additional planning around reporting timetables, consolidation requirements and audit coordination.

With these considerations in mind, most businesses going out to tender will approach a small number of audit firms—often two to four, to ensure a balance between choice and efficiency.

When assessing proposals, cost is clearly an important factor, but it should not be the only consideration.

Other key factors include:

• Relevant sector experience and technical expertise
• The proposed audit approach and risk assessment
• The experience and continuity of the audit team
• The firm’s ability to meet reporting deadlines
• Quality of communication and cultural fit

For businesses with audit committees or multiple shareholders, it is important that the selection process is transparent and well documented, with clear reasons for the final appointment. Businesses reviewing their current audit arrangements or considering changing auditors may also find it helpful to read our article on what makes a good auditor.”

Appointing the auditor

Once an audit firm has been selected, there are several formal steps to complete.

These typically include:

• Board approval of the appointment
• Shareholder approval, where required
• Agreement of the audit engagement letter
• Confirmation of auditor independence and ethical compliance

At this stage, it is also important to agree a detailed audit timetable, including planning meetings, fieldwork dates and reporting deadlines. For first-year audits, additional time should be allowed, as auditors will need to gain an understanding of the business and opening balances.

Preparing for the audit – getting audit ready

Good preparation is one of the most effective ways to ensure a smooth audit.

Businesses should assign clear internal responsibility for managing the audit process, typically within the finance function. This individual will act as the main point of contact for the auditors and coordinate information requests.

Common documentation requested by auditors includes:

• Trial balance and statutory accounts
• Bank, debtor and creditor reconciliations
• Fixed asset registers and depreciation schedules
• Key contracts and agreements
• Accounting policies and procedures
• Evidence supporting significant judgements and estimates

Ensuring that reconciliations are up to date, reviewed, and clearly documented before the audit begins can significantly reduce audit queries and delays.

Many businesses choose to work closely with their auditors ahead of year end to identify potential reporting issues early, improve audit readiness and reduce disruption during fieldwork.

Businesses preparing for a first-year audit or changing auditors may also benefit from conducting an early audit readiness review to identify gaps in documentation, reconciliations or financial controls before fieldwork begins.

During the audit: what to expect

Audits typically begin with a planning meeting, where the auditors confirm their understanding of the business, key risks and the audit approach.

During fieldwork, auditors will request information, test transactions and balances, and raise queries where further clarification is required. Prompt and clear responses help keep the audit on track and reduce the risk of last-minute issues.

Regular communication between the business and the audit team is essential, particularly where issues arise or deadlines are tight.

Common pitfalls and how to avoid them

Common challenges encountered during audits include:

• Incomplete or poorly organised documentation
• Delays in responding to audit queries
• Lack of internal ownership of the audit process
• Underestimating the time required from senior staff

These issues can often be avoided through early planning, clear responsibility and open communication with the audit team.

Final thoughts – making the audit process efficient and valuable

An audit does not have to be a disruptive or burdensome process. With the right preparation and the right audit firm, it can be an efficient exercise that provides valuable assurance and insight.

By identifying audit requirements early, running a well-planned tender process, and ensuring the business is audit-ready, companies can reduce costs, minimise disruption and build a productive relationship with their auditors.

Ultimately, the most successful audits are those viewed not simply as a compliance obligation, but as an opportunity to strengthen financial reporting and governance.

Rayner Essex audit team insights

Audit Manager, Daren Maloy notes that ‘while technical expertise and sector experience are critical, the cultural fit between the business and the audit firm should not be overlooked. An audit is a collaborative process that often involves regular interaction between the audit team, finance staff and senior management. A firm whose working style, communication approach and expectations align with those of the business can make the process far more efficient and constructive. Choosing an auditor that understands how your team operates, communicates clearly, and builds a cooperative working relationship can significantly improve the overall audit experience and help address issues more effectively as they arise.’

In practice, although audits are often viewed purely as a compliance exercise, they can also provide valuable insight into how a business operates. External auditors review systems, controls and financial reporting processes with an independent perspective. As a result, audits often highlight opportunities to strengthen internal controls, improve processes or enhance financial reporting. Businesses that approach the audit as a collaborative process rather than simply an obligation often gain the greatest value from it.

Engaging with auditors early can make a significant difference to how smoothly the process runs. Early discussions allow the auditor to understand the business, identify potential areas of complexity and agree realistic timelines well before year end. This is particularly important for first-year audits or businesses experiencing rapid growth, acquisitions or system changes. Early engagement helps avoid last-minute surprises and allows both sides to plan effectively.

One of the biggest factors influencing how smoothly an audit runs is the quality of a company’s underlying financial records. Businesses that maintain strong monthly processes-such as reconciliations, management accounts and documented reviews-typically find the audit process far more efficient. Not only does this reduce the time spent answering queries, it also strengthens internal oversight and financial control throughout the year, not just at year end.

How Rayner Essex can help

At Rayner Essex, our partner-led audit team provides a responsive and personal service tailored to the needs of each client. We work with owner-managed businesses, growing companies and larger groups across a wide range of sectors, delivering high-quality audit services that support confidence in financial reporting, governance and compliance.

As a full-service accountancy and advisory firm, we take a holistic view of your business. Our audit specialists work closely with colleagues across tax, corporate finance, payroll and business advisory services, enabling us to provide broader commercial insight and support where required.

To discuss your audit requirements or learn more about our audit services, please contact our audit team.