To ensure a smooth audit, ideally you should prepare for it during the year. By keeping on top of your finances throughout the year you’ll be well organised when you need to file your corporate tax returns with HM Revenue & Customs and provide audited annual accounts to Companies House at year end. So, who has to have an audit and what steps can you take to make your auditing process run smoothly, with minimal disruption to your day-to-day activities?
Who has to have an audit?
An audit is an independent examination of an organisation’s accounting records and as well as the physical inspection of its assets amongst other areas. It provides a true and fair view of the organisation’s financial position to the relevant investors and stakeholders. Although there are exemptions for the smallest organisations, many mid-sized and large businesses, as well as certain charities and regulated businesses, are legally required to have an audit of their financial statements carried out. If you are in any doubt as to whether your business or charity requires an audit just ask our team and we’ll explain the threshold levels.
Here are our top 5 suggestions to help ensure your next audit runs smoothly.
1. Book your audit and your key people
To avoid being presented with a long list of demands at the end of the financial year, your first step is to book your audit in the diary in advance so you can work towards it in a timely manner. By doing this, you can also ensure that your key team members know when they need to be available to you, and the scope of support you’ll need from them. Importantly, you can make sure your schedule is free and flexible during the time your auditors are present.
2. Reconcile your accounts regularly
To make your audit as trouble-free as possible, complete accounting reconciliations throughout the year, each quarter or each month depending on the scale of your operations. By doing this any financial issues will be highlighted as they arise, rather than waiting until the end of the financial year. Regular reconciliations will make it far easier to spot, investigate and resolve any errors or oversights prior to the official auditing date.
3. Unusual activity? Speak up!
If anything happens during the year where you think your auditor might need more clarification at year end, then flag it up as it happens. For example, if your company wins an exceptional new contract or records an out-of-the-ordinary transaction then be proactive and talk to your auditor in advance. A simple phone call will give them the opportunity to let you know if that entry needs any special attention, and it’s better to know this ahead of time to save you having to fix incorrect accounting entries at year end.
4. Ask for requirements ahead of your audit
To be able to complete your audit, your auditor will send you a schedule of information they require just prior to the audit. This will include a detailed list of all the documents your auditor will require from you for the audit. Preparation is key, so by understanding which documents you’ll need to provide, you can worry less and take the time you need to compile their requests for financial documents including bank statements and stock records.
5. Embrace digital
Storing your documents digitally in the cloud will mean that you’ll have the information you need readily available to interrogate at the click of a button, rather than looking through filing cabinets or on-site computer files. If you’re already using online accounting software, you’ll know it’s very convenient to record, store and categorise your documents in preparation for audits.
During an audit, the auditor will need to verify the situation with your business assets. If this is a huge task currently, now might be the time in invest in automated asset management software, so you always have the asset information you’ll need at your fingertips.
We can help you further
By taking control of your audit process and checking your financial records at regular intervals you can remove the stress of an upcoming audit. Our friendly audit team can take you through the auditing process and limit the disruption to your business, ensuring your experience is a good one.
For some organisations, rapid growth or a change of circumstances may mean that they need an audit they were not able to plan. If this is your situation, don’t worry! We’ll support you to complete your audit efficiently.
Do let us know if we can help you further. Just contact the team for more information at directors@hbaccountants.co.uk or call 01992 444466 for advice.
