For many organisations, the announcement of an upcoming audit generates anxiety among management and finance staff. This is largely avoidable. Understanding what an audit involves — and preparing properly — makes the process far smoother and more productive for everyone involved.
What Is an Audit?
An audit is an independent examination of an organisation's financial statements and supporting records to provide reasonable assurance that the statements present a true and fair view. External audits are typically required by law, regulation, or donor and funding requirements.
The Typical Audit Process
- Planning: The auditor gains an understanding of the organisation, its environment, and key risks.
- Risk Assessment: Areas of higher audit risk are identified and procedures are designed to address them.
- Fieldwork: The auditor tests transactions, reviews documentation and gathers evidence.
- Reporting: Findings are discussed with management. The final audit report and management letter are issued.
How to Prepare
Good preparation significantly reduces the time and cost of an audit. Key steps include ensuring your books are up to date, reconciling all balance sheet accounts, organising supporting documents, preparing a fixed asset register, and reconciling all bank accounts. Having a dedicated point of contact for the audit team also helps the process run efficiently.
If your organisation is preparing for an audit, Audit Satellite can assist with pre-audit preparation, helping you identify and address issues before the auditors arrive.