How can my business prepare for a financial audit?

Audits are time-consuming and costly events for businesses and organisations, however preparing for an audit can save you money and time.

Audits provide independent opinions on the financial health of a business or organisation and can add real value to businesses of all sizes.

Auditors need to dig deep into the operations of a business and are likely to come with a list of demands for your organisation to complete their work.

While audits can be disruptive at times, businesses can streamline the process by getting ready for the audit throughout the year.

Here are the key points to consider when preparing for an audit:

Get organised for your audit

Businesses can get ready for an audit in a number of ways, starting with setting a timeline with the auditor, including any gradual deadlines throughout the process.

Request a detailed list from the auditor for the information and documents they expect they will need and make a plan to have that information ready in line with the audit.

These documents might include obtaining an audit requirements listing from the auditor to streamline the process, as well as bank statements and reconciliations, inventory records and trial balances.

Reconcile your accounts regularly

To avoid running into reconciliation issues during an audit, finance teams may want to complete account reconciliations quarterly or even monthly.

These regular reconciliations should flag any issues early on and allow more than enough time to correct them before the start of an audit.

Tackle potential problems early

If your business makes a new or unusual transaction that your auditor is likely to flag, then get in touch with them and provide the right information early on.

This way, you won’t have to comb through months of old documents to clarify details about the transaction at the end of the year.

Make sure your organisation is also compliant with all of its financial covenants to avoid delays in your audit.

Get digital support

Online accounting and invoicing software can help businesses store and categorise documents in the lead up to an audit.

These programs can automate much of the file organisation work and free up your finance team for more significant tasks.

Organisations without online accounting software can still scan and upload paper documents to online cloud storage so that it is readily available at the end of the financial year.

Ask questions about your audit

These pointers will help you prepare for an audit, however it’s important to ask questions about anything you don’t understand about the process before you start.

If you don’t understand an item requested by your auditor or a part of the process, your auditor should be happy to field any questions.

If you’re not sure when your business has to undertake a financial audit or you simply want to speak with an audit expert, the team at LDB can assist.

LDB is experienced in providing trusted audit advice to a wide range of clients including small to medium enterprises, public companies and not-for-profit organisations.

To find out more about how we can help your business with a financial audit, call on (03) 9875 2900 or fill in the contact form below.