Preparing for an audit can be stressful for a company, but it doesn’t have to be. With a bit of planning and organization, your company can make the process smoother, strengthen your financial practices, and work more effectively with your auditors.
Through years of experience working with clients across different industries, we have found these three key factors can make all the difference for our clients: mindset, preparation, and communication.
Mindset: Your audit is a tool for growth
Often audits are seen as a regulatory task that is disruptive and stressful for the organization, but it doesn’t have to be this way. When businesses shift their perspective, an audit can be a great opportunity to get your “financial house” in order and discover areas for additional profitability and growth.
For example, a 2023 study found that companies with regularly audited financial statements have better formal credit access compared to non-audited firms, including the ability to obtain bigger loan value, lower loan rates, and shorten borrowing duration.1
Therefore, it can be a business advantage to think about an audit as a tool to build financial stability and fuel growth within an organization.
Preparation: Setting yourself up for an efficient audit
Preparation is likely the most important step for a smooth and effective audit for your organization. Creating good financial hygiene in your organization before the auditors arrive will go a long way, including:
- Reviewing prior audits and internal controls. Address past audit findings, document improvements, and confirm that internal control procedures are current.
- Reconciling and organizing financial records. Ensure all accounts in the general ledger are accurate and reconciled. Gather and organize supporting documents like invoices, contracts, and bank statements.
- Preparing financial statements and key schedules. Have draft financial statements, trial balances, and detailed schedules like AR/AP aging, fixed assets, and inventory ready.
- Documenting major transactions and estimates. Prepare explanations for significant events, accounting estimates, or policy changes that could impact financial reporting.
Communication: The key to progress
Clear, timely, and respectful interaction between your company and the audit firm helps prevent misunderstandings, reduce delays, and build trust throughout the process.
- Respond in a timely manner: Treat auditor questions as opportunities to demonstrate your team’s diligence. Respond promptly, and if more time is needed, acknowledge the request and provide an estimated completion date.
- Establish a single point of contact: Designate an internal audit coordinator to manage all auditor requests and distribute them to the appropriate departments. This keeps communication consistent and prevents duplicate or missed responses.
- Set expectations early: Before fieldwork begins, meet with your auditors to review the audit timeline, document requests, deadlines, and any anticipated challenges. Early alignment helps both sides plan effectively.
- Be proactive and transparent: If issues arise — such as missing documentation, unresolved reconciliations, or new transactions — communicate them upfront rather than waiting for the auditors to uncover them. Auditors appreciate openness and collaboration.
- Use organized channels: Track all document requests and responses in a shared folder, tracker, or audit portal. Label files clearly and keep version control to avoid confusion.
- Schedule regular check-ins: Hold brief progress meetings during fieldwork to review status, clarify questions, and address findings as they come up.
- Conduct a closing discussion: After the audit wraps up, schedule a debrief to discuss preliminary findings, recommendations, and areas for improvement. This helps strengthen the relationship for future audits.
Both auditors and companies want the audit process to run smoothly. Working together to set clear expectations around mindset, preparation, and communication can lead to a successful outcome and positive working relationship.
When you need confidence in your financial statements, audit services from Mowery & Schoenfeld certified public accountants (CPAs) give you objective reporting and insights to make the best decisions for your business. Learn more
1 https://www.tandfonline.com/doi/full/10.1080/23311975.2023.2195985#abstract