Preparing for an audit can be daunting, especially if it’s your first one, but for some businesses it’s something that needs to be done.

The first thing to consider is why your business is having an audit in the first place. Typically, you conduct an audit for one of three reasons.

1. You’re mandated by law
2. Your current or potential partners have requested it
3. You want an audit for your own peace of mind

Voluntary audit

If you are voluntarily undertaking an audit, you will need to decide whether you are auditing the future of your business or assessing the situation to date.

You can conduct this audit at any point of the year. They are particularly beneficial if you delegate the operation of your business to a management team, are contemplating selling your business, or are seeking investment.

When does a company need an audit?

You are legally required to have an audit depending on your company’s size and annual turnover.

The legal audit thresholds are as follows:

• Greater than £10.2 million in turnover
• £5.1 million or over in total assets
• More than 50 employees

If at least two of these are applicable to your company, then your audit must be carried out by an independent party (a registered auditor).

Somebody in your company may need to assist the auditor by providing all the relevant information needed to carry out their field work accurately.

Best practices to prepare for an audit

As audits can be a particularly stressful process, we’ve put together some tips to help you ensure the audit is smooth and successful.

• Prepare early – Make sure your accounts are drafted in advance along with any director’s reports or strategic reports you might save to save time. If you notice a transaction that is unusual and you think could raise alarm bells with your auditor, address them at that time rather than waiting until the financial year-end.
• Document financial procedures – Document how you account for your financial transactions. Where possible digitise everything to help ensure receipts and invoices don’t get lost and can be organised efficiently and accessed easily.
• Audit plan – Try and plan around the audit so that your team are not overloaded with work or on annual leave during the audit where possible. Some key members of your finance team may need to assist with the audit, so it is best that they have space in their diary to do so without impacting their normal workflow.
• Auditors may need to ask additional questions if the documentation they already have doesn’t provide them with the full information, so the quicker they can get the response, the quicker the process will be completed.
• Ask questions – Your auditor should provide you with a full PBC list. Make sure you analyse everything on here thoroughly and if you are unsure of anything seek clarification, that is what they are there for.
• On the flip, side you’ll also need to be prepared for questions about your financial records from the auditor through the process. Try to ensure your answers are clear and concise.

Still unsure? Get expert advice

With the right team, thoughtful planning, and thorough preparation on your side, plus an external audit team you can trust to understand and respect your company’s unique needs, a smooth audit experience is well within reach.

Our team are here to help you navigate the complexity of financial audits, so get in touch today.