Preparing for an Annual Audit or Review: How to Eliminate the Pain and Reduce Overage Fees
If your company is looking for financing from investors or financial institutions, considering a potential acquisition, or foresees an IPO within the next three years, you may need to have an annual financial statement review or audit.
Many dread the infamous annual audit for several reasons:
- It demands a significant amount of time for preparation,
- Management must field exasperating questions from auditors, prepare numerous schedules and gather supporting documentation, and
- Costs can become astronomical.
What Information Will You Need to Provide the Auditors?
To begin, the audit firm will provide management with a list of anywhere from 50 to 150 initial requests that can include items, such as:
- Articles of incorporation and bylaws and any subsequent amendments
- Board minutes from inception
- Fluctuation analysis’ on balance sheet and income statement accounts
- Reconciliations and support for reconciling items
- All debt and equity agreements
- Fixed asset additions and disposals
Once these initial items are provided to the auditors, they will typically request additional supporting documentation, which can include:
- Bank statements
- Check copies
- Invoices
- Bills
- Payroll reports
- Supporting schedules for any accrual or estimate balances
How Long Will the Annual Audit Process Take?
Depending on your preparedness, the organization of your accounting department, your bandwidth to take on the additional hours required to assist the auditors, and the cleanliness of your financial information, an audit can last anywhere from 3 weeks to a full year.
The Cost of Not Being Prepared
Before getting started, the audit firm will provide you with a schedule and budgeted fee that assumes the team can complete the audit with minimal issues; however, if the company is not appropriately prepared, there will likely be significant delays. Any additional time it takes to provide adequate schedules and support in excess of the time that was originally budgeted will impact the auditors’ initial schedule. This can result in a lack of availability for the audit team, preventing them from completing the audit and providing an opinion on time.
Eliminate the Pain and Overage Fees from the Annual Audit Process
If your company is not appropriately prepared, the annual audit process can be an expensive undertaking, both in employee time and company money. It does not have to be though! By enlisting the right assistance, it is possible for your audit to be a simple, stress-free, and a less expensive process.
Hiring an outsourced accounting firm, such as Signature Analytics, that provides you with a professional team of accountants and certified public accountants (CPAs) who have previously been auditors themselves, can significantly reduce the amount of re-work for a company because they know exactly what schedules and support the auditors are looking for.
An outsourced accounting team can prepare schedules in advance so the auditors do not waste unnecessary time waiting for the schedules to be completed. They will also assist with handling inquiries and follow-up questions that arise during the audit process, reducing, if not eliminating, overage fees.
Ultimately though, one of the most valuable tools an outsourced accounting team can bring to the annual audit process, is freeing up your internal staff to focus on their daily responsibilities with minimal interruption due to auditor requests.
Talk to An ExpertBe Prepared for Your Next Annual Audit or Financial Statement Review
Whether you are preparing for your first annual audit, or are dreading an upcoming audit because you have incurred significant overages and delays in the past, Signature Analytics can help. We will ensure that your company is fully prepared and that your financial and business records are in order, making the annual audit process as painless and efficient as possible. We will be the main point of contact for the auditor during the entire process so your staff can focus on their day-to-day responsibilities.
Contact us today to learn how we can help reduce your annual audit fees and minimize the disruption to your business during the process.
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