Six top tips on how to prepare for an audit

There are several things you need to consider when preparing for an audit and to ensure that it runs smoothly and is cost efficient. Below we have summarised six useful hints and tips, enabling you to get the best out of the process:

Year-end finalised figures

It’s essential to ensure you have finalised your year-end figures well in advance of the audit commencing. The auditor will need to undertake some preliminary audit planning work and therefore having the finalised figures ready well in advance of auditing will help with this process.

Balance sheet items

Having supporting backup for all balance sheet items readily available for the auditors to access, helps the audit run smoother. For example, bank accounts and loans should be fully reconciled to statements, aged debtors and creditors reports reviewed, the VAT liability reconciled to the VAT returns, the PAYE liability reconciled to the last payroll report and so on.

Income

An auditor would usually start their audit tests from outside of the accounting system, an example could be from customer contracts, or sales orders. Having these documents ready and audit procedures in place will help with the audit sample selection process.

Expenditure

You should have readily available all purchase invoices to support expenses that have been entered onto your accounting system, whether these are filed in paper files or within your accounting software (soft copies) they should be simple and easy to locate.

Going concern

A key area of the audit that will be reviewed and discussed is the going concern of a company. Going concern means that a company is viewed as continuing in business for the foreseeable future and can meet all of its financial obligations as they fall due, therefore the auditor will need to review and discuss budgets and forecasts including cash flow forecasts and post year-end management accounts. In addition, the auditor will discuss the management assessment of going concern and how has this assessment been made.

Time

Finally, always set aside some time for the auditors during the onsite work. They will appreciate that you have your day-to-day tasks to keep up with, however the statutory audit is a legal requirement and will require some time spent with the auditors to help them with the enquiries and files and documentation required. Preparation is key – the more prepared you are for an audit, the smoother and more efficient it will be for you in the long run!

Get in touch

Rayner Essex are audit and assurance experts who can work with you to ensure that your accounts are fully compliant with statutory and or regulatory requirements. During your company audit we will identify your business and process weaknesses, making recommendations on how to improve on them.

Should you have any questions relating to audit or the audit process. Our team of Chartered Accountants in London and St Albans accountants are happy to help.