Audit Preparation

Audit Preparation

Assemble the evidence, and read the books the way somebody who did not keep them would.

When to use

• An audit or review is scheduled.
• A client asks what an auditor would find.
• A period closes on anything material.

Steps

1. Start from exceptions. Everything open, and everything closed as accepted or written_off, will be asked about. The reason recorded there is the answer, and if it is thin, now is when that is cheap to fix.
2. Check the closes rows for anything reopened. A reopened period with reports drawn from it beforehand is the first thing to reconcile.
3. Trace a sample end to end — from the ledger entry to the source document and back. Pick the awkward ones, not the clean ones.
4. Assemble the standing requests: bank confirmations, reconciliations, payroll summaries, fixed asset movements, related-party transactions.
5. List what you could not evidence. Named, not omitted. An auditor finding a gap the firm already knew about is a different conversation from one finding a gap nobody mentioned.
6. Write the treatment memo for anything judgemental, with its authority.

Output

An audit pack, plus an honest list of what could not be evidenced and what is judgemental. Anything that would change a reported figure goes to the operator before it goes anywhere else.