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The work you do before your audit firm arrives shapes how long fieldwork takes, how many adjustments surface, and how much of your team's time the audit consumes.
Most financial audit delays trace back to the months before fieldwork: significant transactions left unresolved, reconciliations pushed to year-end, and a request list nobody owns. Starting early gives your accounting team and your auditor room to work through those items, which can shorten fieldwork and keep financial reporting on schedule.
A little planning also strengthens risk management. The same habits that make an audit run smoother (documenting decisions, reconciling accounts, and fixing control gaps) make your financial information more reliable all year.
What To Tell Your Audit Firm Before Fieldwork Starts
Share any significant internal or external change that could affect your financial statements, ideally during audit planning. Auditors use what they learn about your business to pinpoint where errors are most likely and design their procedures around those areas, so early notice keeps the audit team from reacting to surprises midway through fieldwork.
That risk-based approach is built into the standards. The American Institute of Certified Public Accountants (AICPA) updated its risk assessment standard through Statement on Auditing Standards (SAS) No. 145, which sharpens how auditors evaluate an organization's risks and internal controls.
Internal developments worth raising include:
- Acquisitions, divestitures, mergers, restructuring, or discontinued operations.
- New product lines, a new facility lease, or a relocation.
- New or refinanced debt, changes in financing terms, or potential covenant issues.
- Ownership changes or turnover in key roles.
- Losses from fraud, cyberattacks, or natural disasters.
- Gaining or losing a major customer or supplier.
- A move to new accounting software.
External changes matter too: pending litigation, tax examinations, new competitors, regulatory shifts, and liquidity pressure. So do significant events after year-end that could affect the financial statements or disclosures. If you're unsure whether something matters, mention it. Your auditor would rather rule out a non-issue than discover a real one late.
How To Resolve Accounting Questions Before Closing The Books
Record the year's transactions before fieldwork begins, and raise unusual items with your auditor early. New contracts, leases, financing arrangements, acquisitions, and one-off transactions often call for research or judgment under U.S. generally accepted accounting principles (GAAP). Settling those questions up front reduces adjusting entries and follow-up requests later.
Your audit firm can walk through the applicable guidance and possible approaches, within the limits of auditor independence. Under the AICPA's independence rules for nonattest services, the client must take on all management responsibilities and designate someone with the right skills and experience to oversee any help it receives. In practice, that means your team makes the accounting decisions and owns the financial statements. Your auditor helps you get there with fewer surprises.
What Can Last Year's Audit Teach You?
Your prior-year adjusting entries, management letter comments, and internal control communications point to the areas most likely to cause trouble again. Review them, build recurring adjustments into your year-end close, and confirm that any agreed-upon fixes are in place and working as intended.
A few examples:
- Missed accruals. If payroll or paid time off accruals were recorded late last year, add them to this year's close checklist.
- Control gaps. If your auditor flagged purchasing controls, check whether ordering, receiving, invoice approval, vendor changes, and payments are split among different people or independently reviewed.
Look past the adjustments, too. Delays, missing documentation, and tough questions from last year are worth addressing before fieldwork so they don't repeat. This is where audit prep and risk management overlap: a control that works for the auditor also protects the business from errors and fraud. GBQ's enterprise risk management and internal audit teams help organizations strengthen those controls year-round.
How To Organize Records & Responsibilities
Support each significant balance with a schedule that ties to the general ledger and trial balance, ask your auditor for an updated prepared-by-client (PBC) list early, and name one internal point person for audit questions. Organized files and clear ownership keep requests moving and fieldwork on schedule.
Back up your estimates
Judgment calls draw the most auditor attention. Be ready to explain how you arrived at items such as allowances for credit losses, inventory obsolescence reserves, warranty obligations, impairment analyses, and progress measures used to recognize revenue over time.
Clarify the PBC list
Confirm the format and due date for each requested item. Many schedules, including receivables aging and fixed asset listings, come straight out of your reconciliations. A secure audit portal or a well-organized shared file makes it easier to submit documents and track what's still outstanding.
Assign an audit liaison
The liaison is often the CFO or controller, though anyone who knows your operations and accounting systems can fill the role. Let other employees know what's expected of them, ask them to keep requested records, and block time to answer questions. Quick, complete answers are one of the simplest ways to keep an audit on track.
Plan Early, Audit Smarter
A well-planned audit tends to be faster, less disruptive, and easier to manage than one built on last-minute scrambling. The time your team saves on audit requests goes back into running the business. GBQ's Assurance team provides financial audits and other business assurance services, and our professionals can help you map out a planning timeline that fits your organization. Empowering growth is only a conversation away: talk to an expert on GBQ's Assurance team.
Frequently Asked Questions About Financial Audit Preparation
When should you start preparing for a financial audit?
Start during the audit planning stage, well before fieldwork. That gives you time to share significant developments with your audit firm, resolve accounting questions, reconcile accounts, and gather supporting documents, which can help prevent delays in financial reporting.
What is a prepared-by-client (PBC) list?
A PBC list is your auditor's list of schedules, reconciliations, and documents your team provides for the audit, such as receivables aging reports and fixed asset listings. Confirming each item's format and due date early helps keep fieldwork on schedule.
Can your audit firm help with accounting questions?
Yes, within independence rules. Your auditor can explain applicable guidance and discuss possible approaches. Management must still make the accounting decisions, oversee any assistance, and take responsibility for the financial statements.
How does audit preparation support risk management?
Reviewing prior-year findings and fixing control gaps strengthens the processes that protect your financial information. Those improvements reduce audit adjustments and help guard against errors and fraud throughout the year.
