Audit readiness: the twelve things to fix before fieldwork

The length of an audit is decided before the auditors arrive. Companies whose close takes three weeks and companies whose close takes three months usually differ on the same short list of items.

Before the year end

Reconcile the subsidiary ledgers. Receivables, payables, fixed assets and inventory should each tie to the general ledger, with a documented explanation for any difference. Reconciliations prepared during the audit are reconciliations the auditor cannot rely on.

Circularise balances early. Bank confirmations, and confirmations from major customers, suppliers and lenders, take weeks to return. Send them before the year end, not after.

Count the stock with the auditor present. Attendance at physical verification is not a formality; it is the evidence that supports the inventory number. Schedule it and tell us in advance.

Close the related party register. Every related party transaction needs identification, board approval where required, and arm's-length support. This is a favourite area for qualification and it is entirely avoidable.

During the close

Cut-off, in both directions. Test the last and first entries of the year across sales, purchases and expenses. Revenue booked a week early is the single most common audit adjustment.

Provision on evidence, not on habit. Doubtful debts, warranty, litigation, and employee benefits should each rest on a computation you can show, not a percentage carried forward from last year.

Fixed asset additions with capitalisation dates. The date an asset was put to use drives depreciation and, sometimes, the tax position. Keep the commissioning evidence with the invoice.

Statutory dues, paid and pending. A schedule of every statutory liability, its due date and the payment reference. Anything unpaid at year end has to be disclosed.

The documentation that saves time

Board and committee minutes, signed. Unsigned minutes are not evidence.

A summary of accounting judgements. Where management exercised judgement — an impairment call, a revenue recognition position, a going concern assessment — write down the reasoning at the time. Reconstructing it in July is much harder.

Access, in advance. Read access to the accounting system, the document repository and the bank portals, granted before day one, removes the most common cause of idle audit days.

A single point of contact. One person who knows where things are and can chase them beats four people who each know a quarter.

What this is worth

An audit that runs efficiently costs less, closes earlier, and — because the team spends its hours on judgement rather than on chasing schedules — usually produces observations worth acting on. The preparation is not for the auditor's benefit.