Ah, audit season—the time of year when you dust off your financial records, brew a few extra pots of coffee, and wonder if you can find last year’s receipts. While audits may not be the highlight of your business calendar, they don’t have to be a hair-pulling exercise. With the right preparation, you can get through the process smoothly. Here’s your guide to surviving audit season with your sanity intact.
Know What You’re Up Against
Before you dive headfirst into the audit prep, it’s crucial to know exactly what you’re preparing for. Is the audit focusing on your financial statements, internal controls, or maybe both? Meet with your auditor to clarify the audit scope, objectives, and timeline because knowledge is power—and it also keeps you from preparing a 500-page binder on something they won’t even look at. Understanding the scope helps you to focus your efforts where they count.
Tidy Up Your Financial Records
Think of your financial records as your business’s closet—it’s time to organize and make sure everything is where it should be. (And yes, this is the financial equivalent of finding that lost sock.). Ensure all accounts are reconciled, including bank statements, credit card statements, and payroll. Make sure every transaction is accounted for, and that you can find the documentation you need. When your financial records are in order, the audit process moves along faster which means fewer late nights for you.
Check Your Internal Controls (Before the Auditors Do)
Auditors love nothing more than a well-oiled machine—so it’s worth double-checking that your internal controls are up to par before they arrive. Review procedures like approval processes and segregation of duties. Ensure your team knows what they’re doing and that no one is both baking the cake and eating it too.
Gather Your Evidence
Gather all supporting documents—contracts, tax returns, inventory records, and anything else that might come under scrutiny. And remember, if it looks like a duck and quacks like a duck, it’s probably a duck—so label your files clearly. Having everything neatly organized and ready to go means less fumbling and faster auditing.
Audit Yourself (Yes, Really)
Before the auditors get their hands on your books, why not give yourself a once-over? Conduct an internal audit of your financial statements and internal controls. Identify any red flags and fix them before the auditors do. A little self-reflection can go a long way in preventing awkward audit conversations (and possible issues) down the line.
Keep Your Team in the Loop
An audit is a team effort, so make sure everyone knows what’s coming and what role they’ll play in it. Many hands make light work, and you’ll want all hands on deck. Communicate the audit timeline and expectations with your team. Hold a meeting, make a checklist, and maybe even offer some moral support (donuts help).
Be Ready for Auditor Requests (and Smile)
Auditors will have questions, and they’ll ask for more information, it’s just part of the game. The key is to respond quickly and with good cheer. Designate someone as the go-to person for auditor inquiries. When questions come up, answer them promptly and accurately.
Timely responses keep the audit on track and build a good rapport with your auditors.
Review, Reflect, and Revamp
Once the audit is over, take a good look at the findings. This is your chance to learn, grow, and do it all even better next time. Review the audit report carefully and discuss it with your team. Implement any recommended changes and pat yourself on the back to survive another audit season. Implementing changes based on the audit shows that you’re committed to continuous improvement and it might just make the next audit a breeze.
Think Ahead to Next Year (Yes, Already)
Just when you thought it was safe to forget about audits for a while, remember that another one is always on the horizon. The good news? Preparing now makes next year’s audit prep that much easier. Keep your financial records, internal controls, and documentation in good standing all year round and schedule regular self-assessments.
Survive and Thrive in Audit Season
While audit season might not be your favorite time of year, it doesn’t have to be a nightmare. With the right preparation, a positive attitude, and a little bit of humor, you can make it through with flying colors, and maybe even look forward to the next one. So, take a deep breath, follow these steps, and remember: you’ve got this.
Avanopti Accounting and Business Services offers immaculate services for your auditing needs. If however, you need professional and reliable help to make audit season a breeze, our accounting firm is here to support you with audit preparation and financial review services that take the stress out of the process. Reach out today, and let’s make your next audit the easiest one yet!