An external audit is an independent examination of your financial statements and records by an auditing company. The purpose of an external audit is to provide assurance to your stakeholders that your financial information is true and fair. An external audit can also help you improve your accounting practices, internal controls, and risk management.
Preparing for an external audit can be a daunting task, but it can also be a valuable opportunity to learn and improve. Here are some tips on how to prepare for an external audit by an auditing company:
- Plan ahead: You should start planning for the audit as early as possible, preferably at the beginning of the fiscal year. You should identify the scope and objective of the audit, the auditing company you will hire, the audit team you will assign, the documents you will need, and the timeline you will follow.
- Organize your records: You should make sure that all your financial records are complete, accurate, consistent, and up-to-date. You should also reconcile any discrepancies or errors in your books. You should keep all your records in a secure and accessible location, preferably in electronic format.
- Communicate with the auditors: You should establish a good relationship with the auditors from the start. You should provide them with all the information they request in a timely manner. You should also answer their questions honestly and clearly. You should avoid withholding or hiding any information that may affect the audit outcome.
- Implement recommendations: After the audit is completed, you should review the audit report and understand the findings and recommendations. You should also discuss with the auditors any issues or concerns you may have. You should then implement the recommendations as soon as possible to improve your financial reporting and management.