Preparing for a financial records audit starts well before the auditor arrives. Good preparation helps organizations organize supporting documentation, reconcile financial information and respond to audit questions without unnecessary delays.
A structured preparation process can also make it easier for finance teams to identify missing records, review unusual transactions and make sure important information is available when the audit begins.
Why Financial Records Audit Preparation Matters
Auditors need reliable financial information and supporting documentation to understand the transactions and balances under review. When records are incomplete or difficult to locate, the audit process can take longer and create additional questions for the finance team.
Preparing financial records in advance gives organizations an opportunity to identify gaps before they become audit issues.
5 Steps to Prepare for a Financial Records Audit
1. Reconcile Financial Accounts
Make sure bank statements, credit card statements and the general ledger are reconciled for the full period under review, not just the most recent month.
2. Organize Supporting Documentation
Invoices, receipts, contracts and payroll records should be easy to locate and matched to the transactions they support. Scattered documentation can make it harder to answer auditor questions efficiently.
3. Review Prior-Year Adjustments
If the previous year’s audit resulted in adjusting entries, confirm that those changes were properly reflected in the current year’s opening balances and financial records.
4. Prepare a Schedule of Significant Transactions
Large, unusual or one-off transactions can attract auditor attention. Prepare explanations and supporting documentation for significant transactions before the audit begins.
5. Designate a Single Point of Contact
Auditors can work more efficiently when they have one person responsible for coordinating questions, documents and responses across departments.
Keep Audit Documentation Organized
A well-organized audit process depends on having the right information available at the right time. Finance teams should maintain a clear record of reconciliations, supporting documents, adjustments and significant transactions.
For organizations that also need to review technology and access controls, SAP Audit Software can help security and audit teams examine SAP access risks and prepare structured audit information.
Teams working with SAP environments can also use SAP audit reports and dashboards to organize risk information for management and audit review.
Get Ready Before the Auditor Arrives
A successful financial records audit preparation process is about more than collecting documents at the last minute. Reconcile accounts, organize supporting records, review previous adjustments, document significant transactions and establish a clear point of contact before the audit begins.
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