How to Best Prepare for a Financial Audit
Most organisations and companies await the dreaded financial audit, which involves a thorough and objective assessment of financial records and statements that evaluate a business’s financial health. This can be a time consuming and expensive process, but it is incredibly value-adding because auditors can provide a list of ways your business can improve by meeting the needed requirements.
Preparing for a financial audit is necessary, and this can be done by streamlining your processes throughout the year with the help of business accountants in the Gold Coast. Here’s how to best prepare for a financial audit to make the entire process go more smoothly:
Preparation does not come days or even weeks before the audit; ideally, it should take place over the course of the year! These preparations are meant to establish the right systems and processes that will make it easier for you and the auditor to find the information needed.
Raising issues immediately to a trusted small business accountant, such as new or unusual transactions, will allow you to address the problem without having to sift through months of old files to clarify details come audit time. Your business should also ensure that any financial covenants are completely and appropriately filed to avoid any delays.
Make Accounts Reconciliation a Regular Occurrence
Reconciliation issues are some of the most common during an audit. It’s not only time consuming, but it can become chaotic as well. By reconciling your accounts quarterly or monthly, you’ll avoid running into these problems during the audit, as it gives you a chance to correct any flagged issues early on.
Every business should start by being organised and detail-oriented with the timeline and requirements of the audit. Ensure to request for a detailed list that you’re expected to provide the auditor with upon inspection, which should include the required information, documents, and process outlines.
Be sure to ask for any deadlines along the way to ensure that your business keeps up with the requirements and to avoid penalties. Expect to prepare bank statements, inventory records, and trial balances during your financial audit.
Manual processes are difficult, time-consuming, and inaccurate. When choosing a Gold Coast accounting firm to work with, consider whether they have online accounting and invoicing services that can help your business store and categorise your documents.
Automating with cloud bookkeeping can free up your team to focus on other tasks that will help grow and scale your business. Plus, having your files readily available on cloud storage makes them easier to access during the end of the financial year.
Request for Documentation
Though this isn’t a preparatory step, it may be considered something that can help you prepare for the financial year ahead. Once the audit is completed, you should request for a record and supporting documentation of adjustments your financial auditors have made, including the auditor’s report, the financial statement, and the details that have gone into preparing both documents. These are essential to have on record and will prepare you for the succeeding financial year and audit.
Having an audit done by a certified and trusted accountant may seem tedious, but setting up the right preparations throughout the year will make the process so much easier. Though sometimes disruptive to your daily operations, financial audits can help business owners spot issues that they might not have been aware of. In this sense, audits can allow businesses to improve and grow significantly! As everybody is gearing up for the start of another financial year, preparing the systems, processes, documents, and other information needed for the year-end audit should have you feeling confident and ready.
Are you looking for small business accountants on the Gold Coast that offer end-to-end accounting services? Here at New Wave Accounting, we offer just that to help small businesses of different industries scale and grow. Book a free strategy session with us today to find out how you can grow your business further!