An annual financial audit is something that companies meticulously prepare for as it is almost dreaded by them. Audit preparation and planning is taken seriously in all companies as it can make or break the reputation of a company. A company that loses reputation also loses trust among both existing and potential investors and in the worst case may eventually lead to insolvency and liquidation. Little blunders in recording, evaluating, and reporting an organization’s financial state of affairs have often led to numerous companies’ fall from grace. Prepare financial reviews keeping the following tips in mind to stay clear from such scandalous blunders (even ones arising from honest errors).
Verification of financial records in preparation for reviews should not be considered as an end-of-the-year occurrence, but instead as a round-the-year effort requiring constant attention. Keeping all financial paperwork well-organized as and when they are created and maintaining a paper trail can save you trouble and prevent hasty preparation when reviews approach. This makes the lead-up to the financial review a simple yet thorough once-over that will ensure that there are no discrepancies in the documentation, instead of a period of chaos where you scramble to verify documents and miss important details, possibly leading to a financial catastrophe.
Reconcile all accounts as frequently as possible, on a monthly or a quarterly basis. Making reconciliations monthly will ensure that minor deviations don’t compound to a great extent by the time the financial review arrives. Waiting until the audit fieldwork to reconcile variations can lead to complications that cannot be fixed easily, which can waste time and resources, and even force accountants to resort to conjecture to make up for missing figures, which can lead to legal trouble and disrepute.
Create an audit preparation checklist to keep track of the audit preparation and planning, and to ensure that all documentation is in place and ready for review. The checklist should include all items necessary to present the organization’s financial situation to the auditors such as the annual ledger, internal financial statements, budgets, checks, bills, details of assets, accounts payable, and bank statements, among others.
The purpose of an audit is to prove adherence to rules and compliance with regulations. Thus naturally, the ideal way to prepare for a financial review is to ensure compliance in all accounting practices throughout the year. This includes everything from reconciling records regularly, documenting all financial processes and reporting on financial performance accurately.
Plan and adhere to a fixed timeline in the lead-up to the financial review to ensure that the preparation for the financial review is on track. Set milestones for verifying documents and generating reports to prevent slip-ups and mistakes due to disorderly haste that may prove to be costly.
Audit preparation and planning can be hard, especially after it is due to being overshadowed by other, revenue-generating processes. When the time for a financial review approaches, businesses are often unable to manage audit preparations due to the amount and complexity of the work involved, and the need to manage their regular ongoing operations. Hiring financial advisors to assist you with audit preparation will allow you to focus on your core operations without having to worry about the review. Contact us to know how your business can benefit from our expertise in audit and tax advisory services.