A financial audit for a business is an examination to determine the health of its finance and accounting processes. Audits give a business creditability with outside entities and are required for some funding.
Being prepared is the best way to lessen the stress of an audit. We’ve created a guide to help you.
And if you’d like assistance with your financial statements or with understanding the audit process, complete the form at the bottom of this page.
1. Alert your teams early.
We suggest alerting affected departments early to give them time to prepare. The less “surprised” they feel, the better.
2. Work backwards.
Put the date(s) of the audit on the calendar (and share with members of affected departments). Work backgrounds from the audit date so departments can make a timeline for completing audit-related tasks.
Remember, audits are time-consuming but important. Plan accordingly.
3. Get to work.
First order of business, review past audits. Previous audits provide insight into internal control recommendations and any adjustments made in earlier audits.
Second, speak with auditors if you haven’t already. Stay in communication with your audit team. Ask questions. Clarify what documents are needed. Check on progress if the audit spans a longer time frame.
Third, gather financial statements and schedules. Often, there are lots of documents to gather and to create.
If you’re wondering what documents are needed, the checklist here is a great starting point. Plus, we’re experts at statements and schedules and have helped many clients through financial audits. Use the form at the bottom of this article to contact us.
4. Stay current on tax code updates and accounting standards.
Some tax codes and accounting standards directly relate to reporting the financial health of your business. For example, Form 990, Schedule O is required for every business that files taxes. When a company does Schedule O well, it’s also preparing well for an audit.
Auditors will look for up-to-date practices. If you’re not following current standards, your team will have much more work to do for the audit.
5. Perform a self-review.
Before the date of the audit, review your company’s work.
Financial audits are a time commitment. But the time commitment is well worth it. After all, financial audits lend credibility to your business, which affects investors, federal funding, loans and more.
The guide above will help you and your team plan for an audit and lessen any stress.
We prepare many financial statements each year and know the audit process thoroughly.