4 Tips to Prepare for Financial Audit 2020

When an auditor is selected, the next thing is to prepare your company for an audit. Many people consider an audit of the company as an unsavoury prospect. They don’t want a separate third party to go through their books of accounts and find out mistakes. Nevertheless, auditing can act as a control measure and can gradually help the company to be more and more profitable.

To be able to conduct the audit of your company in an orderly and manageable way one must do a thorough preparation. Being prepared will not only save the time, money and resources but will also assist the business to achieve more profitability. Let’s have in-depth knowledge of financial auditing and how can a company prepare for auditing.

What is a Financial Audit?

A financial audit can be understood as an examination of the various financial statements of the business and all the associated documents. This audit is mostly conducted by an entity which is entirely separate and has nothing to do with your business. The audits are conducted according to the accounting and auditing standards and are held every quarter or the end of every financial year. Many people do not prefer to have an audit as they feel that it would mean that a separate third party would be going through all their confidential data and then point out errors and mistakes in them. The owners of the company do not like this, and they may get possessive about it.

Although an audit points out the mistakes in the workings and the books of accounts of the company, an audit is done to make the workings of the company seamless and to remove any chance of any illicit and fraudulent activity in the company. The auditors also prepare an audit report which contains all the findings of the audit and allows the new investors to have an in-depth knowledge about the company. After gaining complete knowledge, investors can decide whether to invest in the company or not. The audit report provides an assurance not only to the investors but to the stakeholders as well by providing them what is going on in the company and how is the current financial scenario of the company and also provides them with the surety that the company is compliant to all the rules and regulations.

Purpose of a Financial Audit

An audit is conducted to assist everyone associated with the business. It provides management with the required evidence and data to take action to streamline the various processes of the company. For the potential investors, it provides the required information which would help in taking a decision of whether to invest in the company or not and finally for the present stakeholders; it would provide information about the overall working and the profitability of the company. As an audit is the examination of the current books of accounts of the company, conducting an audit will also assure the shareholders that the company is going in the right path and the management is taking steps to make the business more successful.

Let us now try to understand certain tips and tricks which would allow the business to prepare better for a financial audit.

Tips to Prepare for a Financial Audit?

Conducting an audit can be an expensive and time-intensive process. With proper planning and attention to detail, you can save money, time and resources of the company. Some of the steps you can follow are:

1.Prepare a Timeline

It would help if you should start by creating a timeline for the complete audit process. As you determine when the audit would start wand when will it complete, it would be easier for you to plan the work of the people during the period. The duration of the audit will greatly depend upon the size of the company, the domain it is working in and the number of employees it is handling.

2.Get your Paperwork at a Single Place

For performing an audit services, the auditor would ask for specific documents. You must keep these documents prepared and provide them to the auditor as soon as the requirement presents itself. There also may be chances that the auditor may work from your office itself so you should be prepared for such an occasion.

3.Settle all Previous Accounts

Before an audit, it should be taken care that all the previous accounts have been reconciled and closed. There are no outstanding left in the trial balance. All the major accounts such as cash account accounts receivable, inventory etc. must be settled. It should also be taken care that there should be supporting proof for any major reconciling item.

4.Implement Good and Compliant Practices

The accountant of the company must follow the set rules of accounting while maintaining the books. This would not only reduce the error in the books of accounts but will also significantly reduce the time taken for the audit of the company.

By properly following the above-mentioned tips, the company will be properly prepared for an audit. As you can see that conducting an audit can be a very complicated task and thus an expert and professional auditor should only handle it.

If you are looking for such certified firm, JAXA would be your best bet. It is one of the reputed audit firms in Dubai and is ISO 9001-2015 certified. It would take care of all your business-related problems and would provide you with a customized solution according to your business. For more details on the services we provide do contact us, we would be happy to help.