Audit readiness all year round

For many finance teams, audit season means a scramble: searching for documents, reconstructing decisions and answering questions about transactions from months ago. The work is stressful and often avoidable. Being ready for an audit is mostly a matter of doing the ordinary things consistently, and keeping the evidence as you go.

Know what auditors look for

Auditors want to understand how your business records transactions, what controls exist to prevent and detect errors and whether the figures are supported by evidence. Ask your auditors at the start of the year what they plan to review, what they will need and when. Early conversations remove surprises and let you prepare in manageable pieces.

Document the processes and the controls

Write short, clear descriptions of your key processes: how revenue is recorded, how purchases are approved, how payroll is processed, how the books are closed. Identify the controls within each, who performs them and what evidence they leave. A control that exists only in someone's head cannot be shown to an auditor, and it will be lost if that person leaves.

Keep evidence as you work

• Store supporting documents with the transactions or in a structured, searchable repository.
• Complete reconciliations on time, with preparer and reviewer sign-off recorded.
• Record the reasoning behind estimates, provisions and unusual accounting decisions.
• Keep approvals traceable, showing who approved what and when.
• Maintain a list of open items and how they were resolved.

Plan for the judgments that need explanation. Estimates, provisions and the treatment of unusual transactions are where auditors ask the most questions. Prepare a short memo for each significant judgment, setting out the facts, the options considered, the reasoning and who reviewed it. Writing this at the time is far easier than trying to remember it months later, and it demonstrates that the numbers were produced with care.

Control access and changes

Auditors care about who can change records and how those changes are tracked. Review user access to financial systems regularly, remove access promptly when people move or leave and separate duties so that no one person can initiate, approve and record the same transaction. Keep an audit trail of changes to master data and to system settings.

Coordinate requests, and learn from each audit

Keep a standing list of items that auditors often ask for, such as trial balances, reconciliations, schedules and contracts, and update it as the year goes on. Appoint one person to coordinate requests so that questions are answered consistently and nothing is lost. Track what has been requested, what has been provided and what remains.

After the audit, meet with the team to discuss what worked and what was painful. Fix the root causes of any findings and record what changed. Share lessons with the rest of the business, as many issues begin outside finance.

When evidence is gathered as part of the daily routine, an audit becomes a review of work already done well. That is better for the team, the auditors and the confidence of everyone who relies on the numbers.