5 Tips to a Smooth Financial Audit
Don't just survive the audit; be prepared for it. At KDCPA, we turn the audit deadline into a business advantage.
Here are the 5 essential steps to speed up your audit and save on fees:
1. Review Governance & Lock Down the Timeline
First, review your Operating Agreement or investor contracts!
These documents often dictate when your final audit report is due. As a rule of thumb, private companies should aim for reports to be issued 90 to 120 days after year-end. Establish an agreed-upon timeline with your audit firm to hit that deadline for fieldwork, reviews, and report issuance.
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2. Dedicate a Document Manager
Every assurance engagement starts with a Prepared By Client (PBC) list of documents. To eliminate chaos and control costs, request the PBC list from your audit firm as early as feasible and designate one internal resource responsible for managing all document requests. This centralized approach prevents distractions and keeps your audit running on schedule. (hint: we can help!)
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3. Be Aware of Common PBCs
Understand the common documents assurance firms ask for (bank reconciliations, aging reports, etc.) and prepare them before year-end closes. Crucially, this includes gathering all bank contact information required for year-end cash and debt confirmations. Be ready to provide contact information for legal confirmations as well if litigation matters are impacting your business. Additionally, if you used any specialists during the year for things like valuations, chances are your auditors will ask you about it.
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4. Make Internal Review a Quarterly Habit
There’s a reason why we blog about quarter-end reviews and internal analysis. Conducting a high-level pre-audit review of your general ledger every quarter ensures large swings in accounts are documented and variances are explained early, avoiding painful last-minute surprises.
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5. Proactively Communicate Major Deals.
The fastest way to derail an audit is a surprise. Notify your assurance firm when you are planning or negotiating a major deal (acquisition, new funding, etc.), even if it hasn't closed yet. Proactive communication ensures you apply the correct accounting guidance and compliance rules from the start, avoiding costly rework and delays to your final report.
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We hope these targeted tips prove valuable! Every minute invested in preparation now translates directly into saved time, lower fees, and a smoother process later. Audits are inevitable, but audit stress is not.
Are you facing an assurance engagement and need expert support to build your preparation strategy?
Let's connect and get started on securing your success.
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