Audit readiness for an internal audit or your first financial statement audit
Find your own gaps before the auditors do. Work through the checklist, send us the gaps, and we close them before fieldwork starts.
500+
completed audits
AICPA
peer reviewed firm
What audit readiness means
Audit readiness means your records and your people can answer the auditors before they arrive: you hold the documents, somebody can explain each process from experience, and a second person has reviewed the reconciliations. Audit preparation is the work you do to reach that state, and an internal audit and a first financial statement audit call for the same records and the same evidence.
An auditor who hears about a gap in week one plans around it. An auditor who finds the same gap in week three may have to revisit the scope, and you spend the time you saved on preparation in fieldwork instead.
Five audit preparation steps to take first
Work these in order before you take on the rest of the checklist:
Pin the scope in writing.
Name the cycles in scope and the ones outside it, with a start and end date you both agree on.
Name an owner who has the time.
One person inside the business runs your side day to day, with a backup for each cycle.
Close the reconciliations.
Bank and card reconciliations, and subledgers tied to the general ledger through the period end, reviewed by somebody other than whoever prepared them.
Set up the access before day one.
Read access to the systems, and a shared place to put requested files.
Write down what you know is wrong.
Control gaps, staff changes, system migrations, and each period where a control did not run.
What the internal audit checklist covers
You work through 37 items in seven sections:
Scope and expectations. What is in, what is out, who receives the report and who signs the response.
Documents the auditors ask for. Procedures, delegation of authority, access lists, prior reports, regulator letters.
Records and reconciliations. Bank and card reconciliations, subledgers tied to the general ledger, journals with support, aging reports, inventory counts.
Evidence your team performed each control. Who approved what, when, and what happened to each exception.
People and access. Named contacts with backups, read access arranged in advance, time reserved for walkthroughs.
Issues to disclose first. Known gaps, staff and system changes, missed controls, disputes, unusual and related party transactions.
After the fieldwork. Who reads the draft, who owns each action and its date, who confirms the fixes, and where you record a disagreement.
Download the readiness checklist
Seven sections and 37 items, with the Global Internal Audit Standards cited on the two items that have a standard behind them. Take it to your own team before you take it to an auditor.
Internal audit best practices for a tight deadline
File the evidence at the point your team performs the control.
A reconciliation filed with its review note each month is ready when the auditors ask; a year of them rebuilt in month eleven is not.
Give the auditors the person who does the work.
A manager describes the policy; the person running the cycle can say what happens when the approver is on leave, which is where the auditor looks for a control gap.
Leave the disagreements in.
Where you think a finding is wrong, say so and ask the auditor to record the disagreement. Twelve months later, your managers can act on a report in which the disagreements are recorded.
Audit readiness for your first financial statement audit
For a first financial statement audit you prepare to the accounting framework and to the auditor's timetable. Your management prepares the financial statements, and the auditor issues the report and the opinion. We perform that audit as financial statement audits.
Before your first audit, we prepare four things:
Reconciliations tied to the trial balance.
Each balance sheet account reconciled and agreed to the trial balance at year end.
Journal entries with support.
Each manual entry for the year with its approval and the document behind it.
The close through year end.
Month-end closes finished and reviewed, so you close the year on twelve closed months.
The request list answered.
Auditors send a provided-by-client list, the PBC list, before fieldwork; we answer each item before the auditors arrive.
Where we prepare your records and then audit them, the preparation is a nonattest service under ET 1.295 of the AICPA Code: your management must oversee the work, evaluate the results and accept responsibility for them, and we stay out of management roles. Where another firm audits your financial statements and we perform no attest work for you, the AICPA does not impose that condition.
More on internal audit and our audit services
- Internal audit services
- Financial statement audits
- SOX compliance audits
- How often internal audits should be conducted
- What to expect during a business audit
- What an internal audit report contains
Treat the information as general. Ask a CPA to look at your own facts before you rely on it.
How we set the cost of audit readiness work
We set the fee on four things:
Open items.
We charge by the checklist items you could not close.
Months to rebuild.
We charge more to reconcile twelve months than to review twelve reconciliations you hold.
Accounts and systems.
We add hours for each account and each system we pull records from.
Who audits you.
Where we audit you as well, your management reviews and accepts our readiness work, and we build those steps into the scope.
Send us the gaps you could not close
Work the checklist, then tell us what is left, who audits you, and when fieldwork starts. A CPA reads it and returns a scope and a price for closing the gaps.
Contact
Connect with Dimov Audit
Our dedicated team is ready to assist you on your path to financial success.
24 Mercer St, 2nd Floor, Suite 214
New York, NY 10013
United States
Reviewed by George Dimov, CPA. Dimov Audit reviews accounting processes and internal controls for boards and owners across all 50 states. George brings 20+ years of accounting and consulting experience. Profile