Introduction
A major part of preparations for an audit are having your accounts and all necessary documentation in order. The documents are required by auditors to check that the records of your company are accurate and to validate the figures.
Keeping important documents ready throughout the year can also help avoid delays and make it easier to respond to auditor queries.
In this guide, we look at five important types of documents businesses should keep ready for an audit.
Documents to prepare before audit
Financial Statements
Financial statements are a major document that auditors look at during an audit. They provide an insight into how the company is doing financially and performance wise over that relevant period.
Businesses must ensure their financial statements are complete and up-to-date. This includes the balance sheet, profit and loss account and other financial statements necessary for their business.
Good financial statements help the auditor review the company’s financial information and compare it against the underlying accounting records.
Bank Statements and Reconciliation Records
Bank statements assist auditors in validating the transactions reported in a business’s accounting books. Companies should retain bank statements for the relevant period along with the bank reconciliation records.
Regular bank reconciliations help identify differences between the bank balance and the balance recorded in the company’s books. Keeping these records organized gives the auditor supporting information to review the company’s cash transactions.
Sales and Purchase Invoices
Sales and purchase invoices back up the transactions entered in a company’s accounts. Businesses should retain invoices received from suppliers and invoices forwarded to clients.
These records assist the auditor in determining whether the transactions recorded in the accounts are supported by the relevant documentation. Organizing the invoices and verifying that they correspond to the accounting records can also be beneficial for the audit process.
Payroll and Expense Records
Auditors can review the company’s employee-related costs and other business expenses using payroll and expense records. Businesses need to maintain their payroll records, salary details, expense records and support documentation.
Such records should be correctly sorted and backed up with the appropriate documentation, e.g. invoices or receipts where appropriate. This makes the auditor’s job of verifying the expenses in the accounts with the required documentation easy.
Tax Records and Supporting Documents
A tax records, another crucial document to have on hand in case of an audit. These may be corporate tax records, VAT records, tax reports and supporting documentation, depending on the business and its tax requirements.
These records should be kept in an orderly manner by companies and ensure that the data disclosed on their tax returns is supported by the relevant accounting records and documentation. This can simplify the auditor’s task of reviewing the company’s financial information and tax-related transactions.
How Everest Chartered Accountants LLC Can Help
Preparing for an audit can be a time-consuming process. If financial records are not complete or organized properly, it can take that much longer. Everest Chartered Accountants LLC can help you with your audit and accounting needs such as:
- Financial statements preparation and review
- Support and documentation for audits
- Accounting and bookkeeping services
- Corporate Tax and VAT-related accounting support
- Assistance with maintaining organized financial records
With the right support, businesses can keep their records ready for audit and make the overall audit process easier.