Audit Readiness: What to Have Ready Before Fieldwork

An audit goes faster when the support is ready before the auditors send their request list.

Most audits do not slow down because the numbers are wrong. They slow down because the numbers exist but the support behind them is spread across inboxes, systems, and people. Each request turns into a search, and each search turns into a follow up question.

This is how to get ahead of that, whether it is your first audit or you want the next one to go better than the last.

Why companies get audited

A growing company usually ends up with an audit for one of a few reasons:

• Investors require audited financial statements, often written into the financing documents.
• A lender requires them under a loan agreement.
• A buyer or investor asks for them during diligence.
• The company is preparing for a larger raise or a sale and wants the numbers to hold up.

The reason matters because it sets the deadline. Find out who needs the audited statements and by when, then plan backward from that date.

How an audit works, briefly

The auditors plan the work, then send a request list. It is often called a PBC list, short for "prepared by client." It lists the schedules, reconciliations, and documents they need from you.

During fieldwork they test balances and transactions against that support. They may send confirmations to your bank, customers, or lenders. They test cutoff around year end. At the end, management signs a representation letter, and the auditors issue their opinion.

Your job is to make the support easy to find, easy to follow, and consistent with the general ledger.

What to have ready before fieldwork

Reconciliations for every month

Bank and credit card reconciliations for every month of the year, tied to the statements. Loan balances reconciled to lender statements. Clearing accounts, such as Stripe or payroll clearing, reconciled to their source reports.