End of year auditing procedures can be daunting, especially if this is your first business. In very simple terms, the audit is to analyse the performance of the company in the previous year and carry out checks to make sure your financial practices are sound and accurate.
The inspection of a company’s accounts will usually be performed by an independent organisation or body. Although a common misconception is that auditors are looking for a deliberate act of fraud, in fact the auditor is checking to see that the Financial Statement of Accounts provides a true and accurate reflection of the current state of the business.
The procedure may highlight any errors that have been made, or incorrect practices, which may then be rectified.
Why prepare for an annual audit?
Planning ahead for the end of year audit will make the process much easier for those involved. By collaborating with the auditors, you will find ways to minimise errors and become more efficient. If you provide all the relevant information in an accurate and orderly manner, the auditing process will be much faster, minimising the disruption to your business.
How to prepare
Prior to the auditor’s visit, establish what is required and an estimate of the timeline, so that you can inform company staff. By providing relevant information ahead of time, you will reduce the amount of time needed for the audit.
Make sure that any people who may be needed during the auditing process will be available if called upon. Establish a suitable appointment, so that all relevant contacts are present at the company and available at short notice.
Reconcile all financial documents prior to the audit. If you have an outsourced accounting service, you will probably have all the required information to hand and it will be reconciled and ready to report. If all the calculations are accurate, the process will be much faster and easier.
Be prepared for any questions from the auditor, if necessary arranging for your accountant to be available. You may be asked about any relevant changes to the business and the resulting impact. This may include aspects of the management and changes in personnel, materials or operations.
If your financial affairs are in order, with the end of year accounts and all financial matters reconciled, the process will be quick and simple. There may be some areas that can be improved upon for the next financial year.
Contact us now for more advice about the year end audit process.