Getting your year-end audit completed can be an uphill slog or a fairly smooth process. Much of the outcome depends on the work you can put in ahead of the auditor’s visit. This may seem like an obvious point, but time and again we have seen companies—some that are undergoing their very first audit and those that have been through it many times—drop the ball.
They won’t have the documentation the auditor needs, and they’ll have to scramble. But the auditor may not stick around to wait for you. If you’re unprepared, you go to the bottom of the auditor’s pile. If you have to start over, the original auditor may no longer be available, and you’ll have to answer a lot of the same questions from the second one. The result: You have unnecessarily increased the cost and length of your audit—and the hassle.
Creating a collaborative relationship with your auditor early on and staying in communication are key points. The better you understand the audit firm’s approach to your accounting issues, the better off you’ll be. Help yourself and your auditor by following these tips.
1. Be a PBC list cutter
In preparation for an audit, the audit firm will typically develop a PBC (prepared by client) list of schedules and other documents the client needs to provide for the auditors. The number of items on the list depends on several factors, including whether this is your company’s first audit or first experience with the audit firm and how knowledgeable the audit firm is about businesses like yours.
To keep your PBC list as short as possible, talk with the audit firm before it prepares the list to identify and agree on which items aren’t applicable. Meeting with your auditors before the PBC list is finalized—and educating them about your business, if necessary—limits surprises and helps establish a good working relationship.
2. Be an efficiency zealot
If you’re the type of person who won’t settle for less than the very fastest route to any destination, including the dairy aisle in the grocery store, planning your audit should be no sweat. Everyone else will have to incorporate some extra effort, such as by making a point of designating one person—if possible, someone with an audit background—to coordinate the audit and liaise with the audit firm. This person doesn’t need to prepare and compile all the requested audit information; instead, the coordinator should assign those tasks to the people with the deepest knowledge of and easiest access to the relevant information. Your auditors will appreciate having a single point of contact to track the delivery and status of the audit documents.
3. Be realistic about time
The team involved needs enough time to prepare for the audit. For first-time audits or audits with unresolved accounting issues, figure on at least eight weeks. The least complex audits—for example, those in which the company has regularly maintained accounts and has resolved any issues before the audit or during previous audits—could require as little as two weeks. And keep everyone in the loop on the schedule.
4. Be ready or expect to wait
Don’t initiate the audit until the prep work is complete. Some companies prepare a portion of the audit schedules and have auditors begin the audit because they believe they’ll have the remaining schedules ready before they are needed.
But remember—your team will be busy answering auditors’ questions about the first batch of schedules. So when you fall behind on the second batch, the auditors will be sitting around your office with nothing to do, which costs you money.
5. Be your auditor’s BFF
Remember that auditors do their best work for you when you treat them as your trusted business partners. That means raising and discussing potential issues before they come on-site, and making yourself and your audit team available to answer their questions throughout the audit.
We know from experience that prepping for and completing your audit can feel like climbing Mount Everest. For more tips that will help level the steepness of the journey, download our intelligence report, Audit time? Don’t sweat it, and find out how the lack of preparation can have a direct effect on the business.