An external audit does not have to be a stressful scramble. Companies that treat audit readiness as an ongoing practice — not a year-end event — consistently report smoother engagements and fewer findings.
Start with a pre-audit assessment
Eight to twelve weeks before the audit fieldwork begins, conduct an internal review of your chart of accounts, reconciliation status, and supporting documentation. Identify gaps in revenue recognition policies, related-party transactions, and fixed asset schedules.
Organize your PBC list early
Your auditor will provide a Prepared-by-Client (PBC) list — a catalog of schedules, confirmations, and supporting documents they need. Assign ownership for each item and set internal deadlines at least two weeks before the auditor’s due date.
Document internal controls
Even early-stage companies benefit from written control narratives. Describe who approves expenses, how bank reconciliations are performed, and how revenue is recognized. Auditors evaluate design and operating effectiveness of these controls.
Reconcile everything
Every balance sheet account should reconcile to supporting detail. Pay special attention to accounts payable, accrued liabilities, and intercompany balances. Unreconciled items are the most common source of audit delays.
Brief your team
Ensure key personnel understand the audit timeline and their responsibilities. Designate a single point of contact for the audit team to streamline communication.
Fictional guidance for demonstration purposes. Replace with advice from your licensed accounting professional.