The Fractional CFO Firm to Early Stage Pioneers
6 Tips to Prepare for a Smooth and Successful Audit
Plan your expenses and deductions strategically each year
Egestas tincidunt ipsum in leo suspendisse turpis ultrices blandit augue eu amet vitae morbi egestas sed sem cras accumsan ipsum suscipit duis molestie elit libero malesuada lorem ut netus sagittis lacus pellentesque viverra velit cursus sapien sed iaculis cras at egestas duis maecenas nibh suscipit duis litum molestie elit libero malesuada lorem curabitur diam eros.
- Morbi fringilla molestie magna sed dictum. Praesent pharetra turpis augue.
- Cras mi purus, viverra vitae felis sit amet, tincidunt fringilla lorem.
- non mattis urna ex nec sem. Donec varius diam et suscipit venenati proin tincidunt
- Quisque euismod posuere lacus sit amet volutpat. Praesent vel imperdiet
Maintain accurate and organized financial records for easy reporting
Tincidunt pharetra at nec morbi senectus ut in lorem senectus nunc felis ipsum vulputate enim gravida ipsum amet lacus habitasse eget tristique nam molestie et in risus sed fermentum neque elit eu diam donec vitae ultricies nec urna cras congue et arcu nunc aliquam at.
Talk to a tax professional for expert guidance
At mattis sit fusce mattis amet sagittis egestas ipsum nunc scelerisque id pulvinar sit viverra euismod. Metus ac elementum libero arcu pellentesque magna lacus duis viverra pharetra phasellus eget orci vitae ullamcorper viverra sed accumsan elit adipiscing dignissim nullam facilisis aenean tincidunt elit. Non rhoncus ut felis vitae massa mi ornare et elit. In dapibus.
- Morbi fringilla molestie magna sed dictum. Praesent pharetra turpis augue.
- Cras mi purus, viverra vitae felis sit amet, tincidunt fringilla lorem.
- non mattis urna ex nec sem. Donec varius diam et suscipit venenati proin tincidunt
- Quisque euismod posuere lacus sit amet volutpat. Praesent vel imperdiet
Personalized Marketing: AI helps in analyzing customer data to create personalized marketing campaigns
At mattis sit fusce mattis amet sagittis egestas ipsum nunc. Scelerisque id pulvinar sit viverra euismod. Metus ac elementum libero arcu pellentesque magna lacus duis viverra. Pharetra phasellus eget orci vitae ullamcorper viverra sed accumsan. Elit adipiscing dignissim nullam facilisis aenean tincidunt elit. Non rhoncus ut felis vitae massa. Elementum elit ipsum tellus hac mi ornare et elit. In dapibus.
“Amet pretium consectetur dui aliquam. Nisi quam facilisi consequat felis sit elit dapibus ipsum nullam est libero pulvinar purus et risus facilisis”
Use accounting and tax software to make management easier
Placerat dui faucibus non accumsan interdum auctor semper consequat vitae egestas malesuada quam aliquam est ultrices enim tristique facilisis est pellentesque lectus ac arcu bibendum urna nisl pharetra bibendum felis senectus dolor commodo quam elementum sapien suscipit qat non elit sagittis aliquam a cursus praesent diam lectus tellus mi lobortis in amet ac imperdiet feugiat tristique nulla eros mauris id aenean a sagittis et pellentesque integer ultricies sit non habitant in cras posuere dolor fames.
Although the word 'audit' may not sound very appealing, it is a value-adding activity for growing companies. Audits provide businesses with an opportunity to demonstrate financial integrity, strengthen investor trust, and refine internal processes. However, the audit process can be daunting, requiring thorough preparation and a sharp attention to detail. Whenever you're undergoing an audit engagement, here are 6 tips to get you started on the right foot:
1. Understand the Audit Scope and Requirements
Clarify the scope and objectives of the audit with the auditors. Understand whether you are preparing for an external audit to meet regulatory requirements or an internal audit to assess operational efficiency. Understand what timeframe the audit engagement will be focused on reviewing. A great way to understand the scope and requirements is to request a Prepared by Client (PBC) list from your auditors to understand exactly what documentation and information they will need to conduct their work.
2. Organize Financial Records
For companies undergoing audit, accurate and comprehensive record-keeping is non-negotiable. Auditors will need access to:
- Trial balances and general ledger reports.
- Reconciliations for accounts such as cash, investments, and liabilities.
- Revenue recognition documentation, particularly for complex transactions.
- Compliance-related records for tax, licenses, and financial reporting standards.
A great solution for this is to use cloud-based financial systems such as Quickbooks Online ('QBO') to centralize and organize documentation for easy access. Ensure all records are maintained updated regularly according to your organization's record retention standard.
3. Strengthen Internal Controls
Auditors assess not just your financials but also the processes behind them. Strong internal controls mitigate risks and ensure accuracy. Key areas to evaluate include:
- Segregation of duties for financial tasks.
- Controls over cash management and investments.
- Approval workflows for transactions and expenses.
- Work aids around all key activities of your organization.
Ensure you document your internal controls and provide auditors with a clear outline of your policies and work aid documents.
4. Ensure Regulatory Compliance
Finance firms and fintech startups in particular operate in a heavily regulated environment, making compliance a critical focus of any audit. Be sure to:
- Update licenses and registrations.
- Maintain compliance with SEC, FINRA, or other regulatory bodies.
- Stay current on changes in tax laws and financial reporting standards.
- Ensure understanding and compliance with frameworks like ASC 606.
Use compliance management software to track deadlines and manage regulatory filings efficiently.
5. Communicate Effectively with Auditor and Anticipate Key Questions and Issues
Maintain open communication with your auditors throughout the process. Share clear, organized documentation and proactively address any discrepancies. Ensure to provide the requested documents on time. Auditors will also ask questions to verify the accuracy and legitimacy of your financial statements. Prepare to address inquiries related to:
- Variances in financial data.
- Risk management strategies.
- Unusual or large transactions.
- Any gaps or delays in documentation.
6. Conduct a Pre/Post Audit Assessment
Perform an internal audit or review to evaluate your readiness. This helps identify gaps, ensure accurate documentation, and address concerns before the actual audit begins. Once the audit is complete, review the findings and recommendations with your team. Use this feedback to strengthen your firm’s core operational processes (especially around accounting and finance), address any weaknesses noted by the auditors, and implement a standard operating procedure to prepare for future audits.
Looking for Audit Support?
Learn more about how the Till CFO team can help you prepare for and navigate your first (or next) audit by getting in touch with us here.
