It’s often possible and definitely advisable to be proactive before an external audit of the financial statements. Sometimes a strategic transaction, such as a SPAC deal, can limit the amount of time you have to prepare for the audit, but a proactive, “audit readiness” approach to your audit can lead to a lower audit bill in the end, and a less stressful experience overall. Companies realize cost efficiencies when they undertake pre-audit planning and come up with an audit plan, with the help of audit support experts. They can reduce the risk of having to deal with a prolonged and potentially messy audit.
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Companies that are not prepared for their audit—those that simply do not have the time or foresight to explore whether they are “audit ready”—are at risk for a protracted process that can put a significant strain on everyone involved and lead to surprises that will have to be dealt with immediately. In worst-case scenarios, an audit can last multiple months and even a year. And by then it’s time to do it all over again!
Of course, the situation differs depending on whether you work at a private or public company. Companies that have any plans for an IPO, even if it seems like a faraway goal, can benefit in the long run by partnering with audit support pros who have taken a wide variety of companies, at various stages of growth, through the audit planning process. These experts can lead your audit, act as your liaison and take the load off the team as the auditors make requests and ask questions.
How ready will you be for your auditor’s scrutiny? You could be subject to a stressful audit if your company has recently undertaken a new financial system, implemented a new accounting pronouncement, completed a major transaction or experienced major turnover in the finance and accounting team. Even if you have the most streamlined operations compared to other companies like yours, the decisions you made over the past year may not meet auditors’ expectations.
What is audit support?
Audit support experts have a unique perspective as a third party involved in an external audit. By deeply getting to know the company client and fully understanding the expectations of external auditors (many RoseRyan consultants have worked at both public accounting firms and within corporate finance organizations), these pros can get questions answered swiftly and problems solved quickly—so that the entire audit can occur as seamlessly as possible.
Why is audit planning important?
A private company’s very first audit is often the toughest undertaking. Account reconciliations may be out of date—or never tackled. Internal controls over financial reporting may be lax. An audit readiness team can uncover and address the problematic areas ahead of time.
The fact is some financial audits can be needlessly time-consuming and burdensome. Reliance on experts who can handle the tough stuff on your behalf can ease the entire process.
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Why is audit planning important? The most obvious reason is you want a positive outcome for your audit opinion, and a proactive approach can put you ahead of potential issues. But you also want to get through the entire process unscathed, with employee morale to continue at a strong level and not get bogged down by a longer-than-necessary audit. Even more than that, you want to ensure that your audit doesn’t interfere with your company’s ability to meet its financing and compliance obligations.
Lack of audit expertise, limited resources and accounting records that are not “audit ready” can all interfere with the process. Audit readiness experts anticipate the trouble spots and meet them head on, with insights, ideas and solutions for getting at the information that will meet auditors’ expectations.
Are your journal entries in order? Do you have technical memos to support the decisions made for significant, complex or unusual transactions? Are your accounting policies documented, or are inconsistencies in accounting for similar transactions an issue? The auditors are going to find these things, and it’s a timesaver—and potential cost saver—if they can be uncovered and addressed beforehand.
What if you don’t make the most of audit support services before the audit? There’s the risk of inefficiency creeping in as an audit continues to take up time—the original external audit team may move on to other clients, and you’ll be stuck having to ramp up new members of the team to how your company operates.
Avoid the disruption and minimize the surprises (there are usually some but many are avoidable) by getting audit support or having your audit support services team lead the entire effort.
Under a less intense timeline than the external audit, pre-audit review specialists can uncover missing gaps and proactively ask key questions. They will look at higher risk areas. And they are also getting to know your company so that they can be there for you as the planning session for the audit gets underway.
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With your audit support team, it’s helpful to have an indication of what your auditors will expect to see and the scope of the audit. At this time, you can let them know all about your business—you likely have some nuances about your business that may be new to them, and you can, again, preemptively get ahead of some issues. By asking the right questions, your audit support team can figure out how to best meet the auditors’ expectations and tailor responses accordingly.
With RoseRyan’s audit support services, the audit can be managed like a project, with an individual assigned to each task and a due date. The audit readiness team can make sure each task gets done and check in on status as the project progresses. This way, misunderstandings can be kept to a minimum as one point of contact can speak the language and meet the needs of both the company and the auditor. This person can meet with the auditor and keep everything moving.
Skills gaps or time-resources gaps can be filled by the finance and accounting experts at RoseRyan who are practical in nature and work efficiently to get audits completed.
A tardy audit can delay financing and sap time and energy from your business operations. Prep for your audit—and ace it—with this report.
Drop us a note in the form and one of our experts will set up a time to discuss the ways RoseRyan can help your business go further, faster.
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