Are you ready for your end of year audit? There is a lot of grounds to cover, and could be a complex, frustrating ordeal without proper preparation and/or guidance. Fortunately, we have prepared tit bits with a comprehensive checklist of the sort of records your auditor will need to have on hand in order to complete the audit. Lay the groundwork for a much pleasant audit experience this year by following this simple guide ahead of time:
👉 The Manuals
In essence, policies and procedures provide a framework for day-to-day operations, ensuring compliance with laws and regulations, giving guidance for decision-making, and streamlining internal processes. The fundamental reason behind external audit is to ensure that an organization’s financial statements are free from all material misstatements.
In this regard, policies and procedure manuals tends to play a pivotal role in among other things, illuminating auditors on existing measures instituted to ensure that day-to-day operations are conducted within the scope of the provisions under a specified law/standard.
Below are some of the manuals that your organization, irrespective of the size or industry, should have and be shared with your auditors;
❑ Organization Manual
❑ Departmental Practice Manual
❑ Employee/Personnel Manual
❑ Administrative Manual
👉 The Numbers
Auditors typically evaluate an organization’s bookkeeping and gather supporting documents to back their journal entries. Such supporting documents, if prepared beforehand, could result in the quick and early ending of the complete audit process. Crucial amongst them, regardless of the industry within which you play are;
❑ The General Ledger
❑ The Trial Balance
❑ Payroll report
❑ List of All Bank Accounts and their respective statements
❑ List and Evidence(invoices, bills, receipts etc.) of all transactions
❑ Copies of all legal documents, such as certificate of incorporation, licenses,supplier contracts, employees’ contracts, loan agreements, lease agreements etc.
❑ Schedules, including asset register, prepayments, accruals, general ledger reconciliations etc.
❑ Confirmations from banks, customers, suppliers, lenders etc.
❑ Stock count report (conducted in the presence of your auditor,and on the last day of your accounting year).
The rule of the game from your auditor’s perspective is EVIDENCE. As such, ensure that you have a proof of any undertaking by or on behalf of your organization which, one way or the other, had an impact on your financials.
💡 An ounce of prevention is worth a pound of cure - Always have an evidence, and document your processes.