7 Tips to Make Your Next Audit Less Stressful
A well-run audit starts long before the auditors arrive. With the right preparation, organization, and communication, you can reduce disruption and keep the process moving efficiently.
Here are seven best practices to ensure a smooth audit experience.
1. Start Preparing Early
Audit readiness begins with a disciplined monthly, quarterly, and annual close process. A thorough year-end close, including schedule reviews and balance sheet reconciliations, helps ensure accuracy and minimizes last-minute issues.
2. Centralize Key Documentation
Audits move faster when documentation is easy to find. Keep key legal and financial documents like contracts, leases, board minutes, and journal entry support organized and stored electronically in one central location.
3. Keep Schedules and Reconciliations Current
Review and clean supporting schedules for significant balance sheet accounts routinely to address issues like misapplied cash or aging discrepancies. Reconcile key balance sheet and income statement accounts throughout the year to prevent issues from compounding over time.
4. Prepare an Audit-Ready Workbook
Create a well-organized audit-ready workbook that includes final trial balance(s) and fully reconciled supporting schedules, which allows auditors to sample efficiently and reduces back-and-forth requests.
5. Document and Follow Internal Controls
Clearly document key accounting processes and the internal controls embedded within them, and ensure they are consistently executed throughout the year. Strong controls not only support audit readiness but also improve overall financial integrity.
6. Stay Current on Accounting Standards
New accounting standards can introduce complexity Stay updated on the latest regulatory changes and new accounting standards (e.g., revenue recognition under ASC 606 or IFRS 15, stock-based compensation rules) that may impact your financial statements. For complex transactions, prepare technical accounting memos to support your conclusions and reduce audit risk.
7. Set and Agree on a Realistic Audit Timeline
Agree on an achievable audit timeline with your auditors and ensure key team members are available during the process. Proactive scheduling helps avoid delays and unnecessary stress.
Here are seven best practices to ensure a smooth audit experience.
1. Start Preparing Early
Audit readiness begins with a disciplined monthly, quarterly, and annual close process. A thorough year-end close, including schedule reviews and balance sheet reconciliations, helps ensure accuracy and minimizes last-minute issues.
2. Centralize Key Documentation
Audits move faster when documentation is easy to find. Keep key legal and financial documents like contracts, leases, board minutes, and journal entry support organized and stored electronically in one central location.
3. Keep Schedules and Reconciliations Current
Review and clean supporting schedules for significant balance sheet accounts routinely to address issues like misapplied cash or aging discrepancies. Reconcile key balance sheet and income statement accounts throughout the year to prevent issues from compounding over time.
4. Prepare an Audit-Ready Workbook
Create a well-organized audit-ready workbook that includes final trial balance(s) and fully reconciled supporting schedules, which allows auditors to sample efficiently and reduces back-and-forth requests.
5. Document and Follow Internal Controls
Clearly document key accounting processes and the internal controls embedded within them, and ensure they are consistently executed throughout the year. Strong controls not only support audit readiness but also improve overall financial integrity.
6. Stay Current on Accounting Standards
New accounting standards can introduce complexity Stay updated on the latest regulatory changes and new accounting standards (e.g., revenue recognition under ASC 606 or IFRS 15, stock-based compensation rules) that may impact your financial statements. For complex transactions, prepare technical accounting memos to support your conclusions and reduce audit risk.
7. Set and Agree on a Realistic Audit Timeline
Agree on an achievable audit timeline with your auditors and ensure key team members are available during the process. Proactive scheduling helps avoid delays and unnecessary stress.
Andrews & Cole is a certified woman-owned boutique executive search and consulting firm with a focus on accounting and finance professionals. Clients range from start ups to Fortune 100 in nearly every industry.
