An efficient audit starts early: how companies can prepare

Although many of these materials and explanations are requested every year, the way an audit unfolds can vary significantly from one company to another. Some teams are able to respond quickly and in a structured manner, while others find themselves handling numerous requests simultaneously within a very short timeframe. More often than not, the difference lies not in the volume of work during the audit itself, but in the level of preparation in the months leading up to it.

For CFOs and finance teams, the key question should therefore not simply be, “How can we respond to auditors’ requests more quickly?” but rather: “How can we organise ourselves better so that the process is clearer, more predictable and more efficient?”

Preparing early makes the difference

A financial audit requires an understanding of the company’s key business processes, the identification and assessment of risks, the evaluation of internal controls, transaction testing and the collection of sufficient evidence to support the audit conclusions.

When information is properly prepared and documented, discussions can focus from the outset on the areas that genuinely require attention, rather than spending valuable time tracking down missing documents, clarifying discrepancies or reworking reconciliations.

For the company, the benefits are equally important: fewer disruptions for the finance team, fewer urgent requests and a lower risk of issues being identified at a stage when there is already limited time available for analysis and remediation.

This does not mean conducting an “audit before the audit”. Rather, it is about maintaining financial discipline throughout the year: accurate reconciliations, information that can be traced back to the trial balance and accounting estimates supported by appropriate documentation. These seemingly operational elements often make the difference between a challenging audit and a predictable one.

Reconciliations should not be left until the year-end closing

An audit can bring to light issues that arose many months before the financial year-end, such as unreconciled balances, transactions recorded in the wrong period or balances that should have been cleared or provided for.

For this reason, regular reconciliations are not simply a financial control activity. They are also one of the most effective ways to prepare for an audit.

What matters is not only that balance sheet accounts are reconciled, but that any differences identified are investigated and resolved as they arise. A discrepancy that is manageable during the year can become much harder to explain and to document several months later, under the pressure of the year-end closing.

Accounting estimates: important discussions should start early

Accounting estimates are typically among the areas that involve a high degree of professional judgement and require robust documentation.

The challenge does not necessarily arise when an estimate is complex or when the auditor requests additional information. The risk arises when the analysis, documentation and discussions around the underlying assumptions are concentrated exclusively during the year-end financial close.

To avoid this, the CFO and finance team can consider several key questions early in the process:

• Which estimates could have a significant impact on the financial statements?
• What assumptions and supporting documentation underpin them?
• Has the calculation methodology changed compared with the previous year?
• Are there any new factors that could affect the estimated amounts?

Early discussions with auditors can help clarify complex matters before year-end, while there is still sufficient time to document conclusions and perform any necessary additional analyses.

Financial statements through the auditor’s lens

Not all financial statement line items carry the same level of risk, complexity or documentation requirements. This is why, ahead of the audit, it can be useful to assess the key areas that are likely to require greater attention.

One of the simplest questions the finance team can ask is: “What has changed significantly compared with the previous year and what impact could this have on financial reporting?”

Changes such as an acquisition, a restructuring, a significant contract or a change in the business model or accounting policies may raise additional questions and require different documentation compared with previous years.

Identifying these developments before the audit begins allows the finance team to prepare the relevant explanations and supporting documentation before they turn into urgent requests.

A well-planned timeline eases the pressure on both teams

Technical preparation should be supported by clear communication between the company and the auditor.

A timeline agreed in advance, taking into account both teams’ availability and reporting deadlines, helps teams allocate resources realistically and anticipate periods of increased workload.

Discussions around sensitive matters or unusual transactions are equally important. The earlier these are raised with the auditor, the more time there is for clarification, documentation and analysis.

A better audit starts with better financial processes

An efficient audit is not built in the final weeks of the year. It is the result of financial discipline maintained throughout the year: timely reconciliations, well-documented estimates, early identification of significant changes and clear communication with the auditor.

For CFOs and finance teams, the benefit goes beyond completing the audit on time. It means a more predictable process, fewer urgent requests and more time to focus on matters that genuinely require in-depth analysis.

The relationship with the auditor should therefore not begin with the audit request list. Ongoing dialogue can help address complex matters early and ensure better preparation for the audit period.

Because, in reality, busy season starts long before busy season.