Achieving audit readiness: Essential strategies for your next audit

How to ensure audit readiness

Effective planning and preparation are vital to achieving audit readiness. Start early to implement necessary changes well before the audit commences.

If you've undergone audits before, leverage the insights gained from past audits. Carefully analyse previous findings and address the recommendations to enhance your audit readiness.

Evaluate your current state of audit readiness by identifying potential risks stemming from operational changes, significant transactions, upcoming events, or new accounting systems that require attention.

You must also showcase the strength of your business plans from both commercial and financial perspectives, as auditors increasingly focus on verifying that companies are a going concern.

Documenting key risks and prioritising areas of focus will help allocate resources effectively and close gaps in your audit readiness.

Five steps to assess your audit readiness:

1. Identify and document areas of risk, including operational changes, key personnel shifts, or updates to accounting standards.
2. Identify gaps or weaknesses in your internal controls and systems that could hinder audit readiness.
3. Compile and review essential documents such as accounting policies and procedural documentation to ensure audit readiness.
4. Gather adequate evidence to support closing balances, ensuring any discrepancies are thoroughly investigated and reconciled.
5. Report on identified gaps and key risks and develop a comprehensive action plan to enhance audit readiness.

Common challenges impacting audit readiness

1. Technical accounting issues

Inadequate training and expertise can lead to mismanagement of significant transactions, resulting in audit readiness challenges and delays.

2. Data management issues

Inefficient data collection from complex systems can hinder your audit readiness, consuming valuable time that could be spent on reconciliations.

3. Time constraints

The absence of a dedicated audit manager can lead to delays as audit requests become scattered among team members, negatively impacting audit readiness.

4. Projected financial information

Weak financial models can compromise audit readiness, as auditors require detailed documentation for going concern assessments.

5. Internal control deficiencies

Lack of transaction documentation and absence of cut-off testing can lead to errors and hinder your audit readiness.

6. Accounting policy misalignments

Misalignment with accepted standards can complicate audit readiness, affecting decision-making and financial credibility.

7. Unreconciled accounts

Failure to perform reconciliations can lead to discrepancies that negatively impact your audit readiness.

8. Complex consolidations

Poorly managed consolidations can lead to missed adjustments, jeopardising your audit readiness.

9. Changes in accounting standards

New accounting regulations can add complexity and impact your audit readiness by increasing the workload on your finance team.

10. Poor communication

Lack of regular communication with auditors can lead to misunderstandings, extending the audit process and impacting audit readiness.

Maintaining audit readiness

Audit readiness is not a one-time task but an ongoing commitment that necessitates diligence and proactive measures. Cultivating a culture of compliance helps frame the audit process as routine, rather than a source of anxiety for your finance team.

• Conducting regular financial reviews—monthly or quarterly—can help identify discrepancies early, aligning the team with the business’s financial objectives and enhancing overall audit readiness.
• Implementing strong internal controls is critical. Establish and document procedures for financial reporting, data entry, and transaction approvals to mitigate risks and ensure audit readiness.
• Providing training on audit procedures is essential. Equip your team with knowledge on expectations and responses during audits to enhance efficiency and overall audit readiness.
• Engaging with your external audit team ahead of the financial year-end ensures that expectations are clear and deliverables are agreed upon, allowing for better resource planning and enhanced audit readiness.
• Reviewing the previous year’s audit findings and conducting debrief meetings with your internal team and the audit team can identify efficiencies and improve your audit readiness for the next cycle.

Upcoming changes to audit thresholds

Starting 6 April 2025, the audit threshold for companies will be revised.

Currently, a company must undergo an audit if it meets any two of the following criteria:

• Your turnover exceeds £10.2 million.
• Your assets exceed £5.1 million.
• You employ more than 50 individuals.

From 6 April 2025, the audit requirements will shift, and a company will need to undergo an audit if it meets any two of the following criteria:

• Your turnover exceeds £15 million.
• Your assets exceed £7.5 million.
• You employ more than 50 individuals.

These changes aim to reduce burdens and administrative complexities for businesses, fostering a more competitive environment for uk companies. Read our insights on the potential implications of these changes and discover how they may impact your audit readiness.

How our team can enhance your audit readiness

Whether you require interim support, technical guidance, or assistance with audit liaison, our team of experts is here to help.

We offer scalable resources and specialized knowledge to support your finance team, alleviating workload pressures and ensuring your audit readiness is seamless.

Contact us today