The annual audit can be expensive, in terms of staff time and audit fees. By taking the following steps, you can reduce the overall expense.
Review the “prepared by client” list that the auditors provide. Most public accounting firms will provide their clients with a list of items and documents they will need. As financial consultants, we often maintain many of these items and assist in gathering the records.
Communicate with the auditors, so you are aware of any specific needs they have, as well as any changes to the audit process from the prior year.
Keep good documentation all year. All vendor and customer files, as well as any legal documents and any other pertinent information, should be kept in an organized manner and easily accessible.
Institute and document accounting procedures, then follow them. The CPA firm will inquire about your accounting processes and internal controls. The existence of documented procedures and controls will provide support for the accuracy of your financial reports.
Be ready to discuss any relevant estimates, such as allowance for doubtful accounts, warranty reserves, etc.
Make sure that your audit is scheduled so that you have time to be ready, and so that key personnel are available to assist with the audit.