How to prepare your business for an audit
For businesses preparing for a yearly audit, it can often be seen as an onerous task but with expert guidance and a greater understanding, it can become a much smoother process.
We sometimes find that our clients aren’t always aware why they are being asked for certain information during their audit as they cannot understand its relevance, however there is often information that although on the face of it may not seem relevant, is of great importance in the audit process.
Fraud procedures
As part of a yearly audit, management are likely to be asked about fraud and this is because the responsibility for preventing fraud lies with them. For this reason, your audit will look at the procedures in place to detect fraud issues and help prevent them from occurring.
It is essential to have thorough and robust measures in place.
IT controls
Following updates in the auditing standards which came into force for periods beginning on or after 15 December 2021, auditors needed to revisit their approach towards risk assessments.
There was a much greater focus on the IT environment and general IT controls in place in the revised standards, which is not surprising given technological advancements and the huge shift towards digital accounting methods.
More technically advanced businesses with a range of production methods, enterprise resource planning software or CRM software may also require extra time from their auditor to ensure a deep understanding of IT systems in place and any controls surrounding them.
Cost increases
Your auditor may ask you to revisit your order book or cash flow forecasts which were produced at the beginning of the year and the reason for this isn’t always clear.
With the continued increase in costs at the moment, particularly in relation to energy, this is having a huge impact on many businesses and those who are unable to absorb or pass on these cost increases could see themselves falling into financial difficulty. Previous forecasts could become quickly out of date due to variations in costs, so it’s important to keep on top of any changes.
Summary
The above details some of the more common audit areas we are regularly asked to explain in more detail, you may also find you are asked further questions towards the end of your audit which you feel have already been covered. The auditing standards include a ‘stand back’ requirement to consider the overall sufficiency and sustainability of the audit evidence gained, this could lead to further questions by means of completeness and not because any issues have been highlighted or information missed.
Get in touch
Our expert team can guide you through the complex world of regulation and compliance to ensure you meet your statutory obligation, whilst helping you make the most of your audit by gaining additional insight into your business and supporting you in achieving your goals. Get in touch to discuss our audit services in more detail by emailing enquiries@pmm.co.uk or calling 01254 679131.
