11 Things To Do Now To Prepare For Your First Audit

A financial statement audit attested by an independent auditor includes the examination of a company’s financial records that include balance sheet, income statement, statement of cash flows, statement of equity and disclosures by an independent auditor. The audit report indicates fair presentation of the financial statements and related disclosures.

An audit helps companies validate their numbers, but can also reveal weaknesses in internal controls and help detect areas susceptible to fraud risk. Companies should take this opportunity to improve controls around key operating cycles and protect against fraud.

An audit generally includes:

• Planning and risk assessment
• Understanding internal controls over financial reporting process and / or internal control testing
• Substantive testing of financial statement account balances – This includes testing balances, vouching to supporting documents, confirming balances with third parties, tracing balances to ledger, performing inventory observation, reviewing reconciliation, investigating differences, etc.
• Financial statement analysis that could include variance analysis, trend analysis, ratio analysis, etc.

Being prepared for an audit is very important. First, it will ensure a smooth process and second, provide a better understanding of the financial process from the perspective of an independent certified accountant. Companies may learn more about the financial health of their company during the audit process and discover ways to improve their operating cycles.

Here, we’ll cover the top eleven things you can do today to ensure your first audit goes smoothly.