Whether your end-year is months away or just around the corner, you always experience the familiar feeling of audit dread. However, audits don’t need to be your worst nightmare. Preparing ahead can make the audit less daunting, whether you are facing a tax or financial audit.
Whyte & Associates, Inc. proudly helps clients in Rancho Cucamonga, California, with audit matters, and today we guide you on how to make your business audit ready.
Financial audit checklist
Financial auditing is a critical function that helps evaluate whether the financial records have been prepared according to the accounting standards. An audit identifies and corrects material misstatements in books to ensure your financial statements reflect a true and fair view.
Undergoing an audit can be stressful, but better preparation can ensure a smooth and successful audit. One of the best ways to get ready for an audit is to have a checklist before D-day. If you are facing a financial audit, here is a checklist to ensure you are ready.
- Balance sheet reconciliations: Reconciliations are a sign that your books are healthy. Keep a record of your monthly, quarterly, or semi-annual reconciliations and show how errors identified were fixed.
- Ledgers: If you have accounting software, this should be easy. Auto-generate the general ledger, creditor and debtor aged analysis, trial balance, and other ledgers for scrutiny by the auditors.
- Inventory counts: Do you hold inventories? Document your end-of-year physical count. Your auditor will use these records to do a roll backward to establish the value of stock held at the end of the accounting period.
- Expenses: All expenses should be accurately recorded in the books. Provide an expense list with supporting documents for verification. Your filing should be easy to follow to hasten the audit process.
- Revenue: Revenues should be correctly accounted for in the accounting period they relate. Ensure you have a proper year-end sales cut-off. Also, avail your invoices and tax returns for sales tax purposes.
- Fixed asset register: You should provide a well-sorted fixed asset register showing the asset description, value, date of acquisition, and depreciation computation.
Still not sure what you need to become audit-ready? If you are in Rancho Cucamonga, CA, please dial (909) 575-0080 to talk to Whyte & Associates, Inc. Mr. Steve Whyte and the team offer tailor-made advice to help you rest easy when an audit beckons.
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