The more work auditors need to do, come audit time, the more hours they are going to bill.
To ensure that your are 100% ready for your auditors, and save time and therefore money, put the following checks and balances in place:
- Generate Trial Balance in electronic format (with opening balances)
- Copies of minutes of management and directors’ meetings for the year under review up to date of the audit
- Detailed general ledger for the year under review – electronic format.
- A list of legal disputes, including details and amounts involved. Also, a list of attorneys you currently use, and their contact details, including labour attorneys.
You should disclose your commitments and possible contingencies in your financial statements where appropriate. Your auditors need this to check the accuracy and completeness of these disclosures
- Ensure that all balance sheet items are fully reconciled with supporting documents on a monthly basis (this should be your Bible). When reconciling your balance sheet items, at year end, ensure that there aren’t any accruals or pre-paid items that cannot fully be accounted for. Remember: an accrual can only be raised, if there is an invoice issued for the service rendered within the current financial year, but only paid or still to be paid after year end. Accruals cannot be made on Purchase orders.
- Ensure that all income statement items are checked, in terms of VAT claimed and allocation on a monthly basis. By checking it monthly, you address problems and errors as they occur.
- Ensure that there are VAT documents for all VAT items claimed. Check this monthly when returns are submitted.
- Ensure that your Fixed Asset Register file is kept up to date every time an asset is purchased with the following documents in it – Copy of Original Tax Invoice, authorized Purchase Order, 2-3 quotes.
- Ensure all assets that need to be re-valued, are re-valued at least a month before the audit.
- Ensure that all bank recons are fully reconciled monthly and that all un-reconciled items are cleared frequently.
- Ensure bad debt and all other provisions are reviewed at least a month before the audit.
- Ensure all Client invoices and Credit Notes, Supplier Invoices and journals are filed numerically and readily available.