If you are preparing to conduct an audit for the first time, or haven’t undertaken one in a while, it can be a daunting experience.
Whether your business is required to undertake an audit by law or you have chosen to conduct an audit to assist with a deal or to monitor the financial health of your company there are steps that businesses can take.
To help you with the audit process we have outlined some of these below:
Plan – Take time to prepare for an audit by setting aside time for audit fieldwork and ensure you can communicate with those involved in the audit process. By planning and spelling out clear expectations of an audit you can minimise the disruption and stress of the audit process.
Keep up to date – Make sure schedules, records and reconciliations are kept up-to-date throughout the year. If you anticipate an audit in your future, treat the period running up to it as part of the audit process.
Contact – Designate a single point of contact within your organisation who can deal with audit enquiries promptly. It is advised that you keep an open line of communication between your organisation and auditors before, during and after an audit takes place.
Monitor accounting standards – Audits are bound by specific accounting standards, which can differ from one organisation to the next. Try and keep up to date with the legislative and regulatory requirements for an audit to ensure you can implement new standards and tax laws.
Prepare answers to expected questions – There are many common queries that you are likely to face during an audit. Take the time to find out what independent auditors may want to know and prepare the information that is relevant to their queries in advance. This can help to streamline the process.
Take stock – If you have previously undertaken an audit review, take time to input any audit adjustments, implement the internal control recommendations or to consider the struggles encountered previously and attempt to deal with these issues in advance, so that they do not delay the process again.
Get organised – Create a file of audit work papers that can be accessed by the appropriate personnel. This could include producing subfolders for significant transaction cycles, such as cash, revenue and receivables, expenses and payables, investments, fixed assets or debts that will make it easier to access information.
Be inquisitive – Don’t be afraid to ask lots of questions. If a request from an auditor is unclear, or sounds overtly technical and you are unsure, request clarification from the audit team, who are happy to answer these questions. At the same time, make sure you are asking the right internal questions of your team to fill any holes in the data you hold.
Review – Whether you are conducting an audit within the current year or not, it doesn’t hurt to review schedules and work papers to ensure all amounts reconcile with your business’s balance sheet. Not only will this give you better financial oversight, but it could help spot the early indicators of accounting errors or fraud.
Don’t ignore the findings – Having invested time and resources into an audit, make sure you read over the audit report and discuss it with your management team. Many auditors will be very happy to attend meetings with the audit or finance committee, or a board of directors, to explain their findings, so make the most of this opportunity. Document conclusions that you reach post-audit to help guide future audits and take action to improve any weaknesses in your finances or accounting systems.
If you are looking for guidance or advice on audits, please contact your Seymour Taylor representative today or enquiries@stca.co.uk 01494552100 or visit the Audit section of our website to find out more.
This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at time of publishing 11th February 2021.