So, it’s that time again and you have an audit coming up…?

We’ve spoken with our audit team to get some insight into how to make the process run smoothly and to turn audit time into your favourite time of year! 

With no further ado, let's get ready to AUDIT!

Get organised 2-3 months before year end

Talk to your auditor to start the planning process for your audit.
During this meeting, your auditor will work with you to:

• • get an updated understanding of your business and discuss any changes since the previous audit
  • ascertain the key internal controls involved in the financial reporting process
  • discuss the user of your financial report
  • understand your audit requirements
  • your objectives (e.g. areas of increased risk or focus)
  • key deliverables (e.g. reporting obligations to overseas parent company auditors)
  • regulatory requirements (e.g. reporting to ASIC, ACNC or Consumer Affairs)
  • preferred timing of audit
  • preferred location of audit (i.e. at your premises or remotely where possible)

Your auditor will lock in critical audit dates including site visits, stocktakes, reporting deadlines, signing dates, Board meetings, AGM and so on.

Review your previous audit findings and recommendations.
Have you addressed all the matters raised in your previous audit management letter?

Ensure your finance team are on top of any changes to accounting standards and reporting requirements.

The Australian Accounting Standards have had some major changes over the last three years. These new accounting standards need to be reflected in your financial statements or this can create issues during the audit and potentially result in misleading financial information being used for management decision-making.

2-3 weeks before the audit commences

Consider the impact of COVID-19 on your business.

Given the current climate with COVID-19, you’ll need to consider the impact the pandemic has, or is likely to have, on your business and whether you will be able to continue operations moving forward.

If COVID-19 has had an impact on your business, we recommend you revise your projected cash flows and financial statements. Include analysis of various scenarios, including the ‘worst case’, and outline the assumptions you’ve made in these scenarios. This will help you assess whether your business will be able to continue, or whether alternate options may need to be considered.

 Upload all your relevant documentation to our client portal.

Ashfords will send you a link to our secure client portal that enables you to send us all required information in a much safer way than via email or face-to-face (given current social distancing recommendations). You simply drag and drop the selected document into the relevant section of the audit program, resulting in a quick and easy transfer of information.

Once we receive this information from you, we can complete our risk assessment, determine the best way to approach your audit and provide you with a sample of transactions we wish to test.

Before 30 June

Speak with your bank to obtain a “letter of comfort” if you know or suspect that your business has breached any debt covenants* during the year. This letter needs to state that the bank is aware of any actual or suspected breach and that they do not expect the debt to be repaid earlier than as per your finance facility agreement.

This letter must be received from the bank prior to your financial reporting date.

*Most finance arrangements have debt covenants (e.g. financial ratios such EBITDA or Interest Coverage) that must be met otherwise the bank can demand that the debt be repaid in full. If a covenant has been breached, the debt can be classified as a current liability unless you have a “letter of comfort” from your bank.

Talk to Ashfords about how we can improve your audit experience

Call the Ashfords Audit and Assurance Team on (03) 9551 2822 to discuss how we can help make your next audit run smoothly and efficiently and make audit time your favourite time of year!