For some businesses, the annual audit is a burden, a complicated mess of reporting, analysis, and documentation. However, it does not have to be the case. An annual audit does not have to be complicated as long as you prepare for it properly. But how do you prepare for your annual financial audit? In this article, we talk about the things your company can do to ensure that your financial audits commence smoothly.
Getting one the same page
One of the most important things to remember when working with an external auditor is that you have to collaborate with one another. Prior to an external audit, the company owner or chief financial officer must communicate priorities with the auditor to determine high-priority items, while also considering a reasonable and workable timetable.
Such priorities must be communicated to the staff along with the procedures that that will be involved in the audit and the timetables that are assigned for each auditing procedure. To ensure that the audit ensues smoothly, it is important to have coordination between the involved parties and the external auditors. Identify specific contact persons for the auditor to communicate with throughout the audit, to avoid involving other people in the auditing process and disrupting day-to-day operations.
Optimise your accounting and reporting processes
One of the reasons why auditing takes a long time is misaligned processes. To better prepare for annual audits, make sure that your accrual accounting works on the same timeline as your financial reporting. If you do produce and present monthly financial reports, your accrual accounting should also be performed on a monthly basis. Doing this effectively eliminates the time needed to do corrections or reversals at a later time.
While keeping a paper trail of all your transactions is ideal, sifting through folders and boxes of receipts can prove to be time consuming. To expedite the process, make sure you keep a secure digital library of all pertinent documents. With a digital library, you can immediately pull out a reference document through the system during auditing, saving both time and effort. Bank statements and other vital documents should be filed within the library as well, as these documents may be difficult to obtain later on.
Another measure that can expedite annual audits is regularly closing your accounting books every month. Reconciling records at the close of every month ensures that all expenses are accounted for, thus preventing financial oversight. Doing this also makes it easier to spot and address discrepancies in records.
Audit firms in UAE will often provide a checklist of requirements that they will need to conduct a proper and extensive audit of your company. This list will generally include a variety of financial statements and documents. To expedite the process, make sure you prepare these requirements before the date of the fieldwork.
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