AFS and Audit Preparation
Teams that prepare properly spend far less time in the audit, and the difference is almost entirely the file. Auditors spend most of their hours requesting evidence and waiting for it, and every wait is billed. A team that understands what will be asked for, and why, can assemble most of it before fieldwork begins.
1
Perspective
Why auditors ask
2
File
Build it properly
3
Anticipate
Know what is coming
4
Manage
Handle the process
5
Review
Learn from last year
How the Training Works
01
Understanding the Auditor Perspective
Most friction comes from teams not understanding why a request is being made. Once somebody grasps what an auditor is trying to prove, the request stops feeling arbitrary and the right document gets produced first time.
- What an auditor is actually testing and why
- Assertions behind common requests
- Why sampling works the way it does
- Materiality and why small items are sometimes still asked for
02
Building the Audit File
A schedule per material balance, reconciled and cross referenced to the trial balance. The file should let an auditor answer a question without asking anybody, which is what shortens the audit.
- Lead schedule per material balance
- Reconciliation of every schedule to the trial balance
- Indexing and cross referencing conventions
- Source documents filed and retrievable
03
Anticipating Requests
We work through the standard request list by balance so the team can prepare in advance rather than reacting. Confirmations in particular have to be issued early or they hold up the entire audit.
- Standard request list worked through by balance
- Bank, debtor and legal confirmations issued early
- Stock count arrangements and attendance
- Board minutes, contracts and agreements assembled
04
Managing the Audit Process
How to handle queries so they resolve rather than multiply. A single point of contact, a tracked query log and prompt responses do more for the timetable than any amount of goodwill.
- Single point of contact rather than scattered requests
- Query log maintained and tracked to closure
- How to respond so a query does not generate three more
- When to challenge a proposed adjustment
05
Reviewing Last Year
We work through the previous management letter and the queries raised. The same requests recur annually, which makes last year audit the best available preparation guide for this one.
- Prior year management letter worked through
- Recurring queries identified and pre empted
- Prior adjustments understood and prevented
- Preparation checklist built for this year
What You Receive
- Audit file structure and indexing conventions
- Lead schedule templates per balance type
- Standard request list to prepare against
- Query log template and process
- Preparation checklist built from your prior year audit
- Attendance record and reference material
Indicative Timeline
One day covers it. Timing matters more than duration: run two to three months before year end and the team can act on it, rather than the week before fieldwork when it is too late.
- Prior year documentation review: three to five days
- Material preparation: one week
- Delivery: one day, ideally well before year end
- Follow up during file preparation: agreed at booking
What We Cover
Practical content aimed at shortening the audit and reducing the adjustments arising from it.
Lead Schedules
A supporting schedule per material balance, reconciled to the trial balance.
Reconciliations
What each one proves and why an auditor asks for it in that form.
Confirmations
Bank, debtor and legal confirmations, and why they must be issued early.
Working Papers
Indexing, cross referencing and the conventions that make a file navigable.
Query Handling
Maintaining a query log and responding so matters close rather than expand.
Adjustments
Understanding proposed adjustments and when to challenge rather than accept.
Frequently Asked Questions
When should this training happen?
Two to three months before year end. Delivered during fieldwork it is useless, because the file either exists or it does not by then. Delivered early, the team has time to build the file as the year closes.
Will this reduce our audit fee?
It should reduce the hours, which is what most fees are based on. Auditors bill for waiting, and a complete file removes a substantial part of that. We would not guarantee a fee outcome, which is between you and your auditor.
Our auditors ask for different things every year. Why?
Sometimes because the risk assessment changed, sometimes because the team is new. Much of it is standard though, and working through the prior year requests is the best predictor of this year.
Can you train us if you are also our auditor?
No. Training a client on how to prepare for our own audit creates a conflict, and we would decline. Where another firm audits you, there is no such constraint.
Who should attend?
Whoever prepares the file, usually the financial manager and the finance team. Where an external accountant prepares the statements, including them is worthwhile because the file and the statements are the same exercise.
What if our records are not reconciled during the year?
Then the file has to be built at year end, which is slower and more expensive. The training covers that reality, but the honest answer is that monthly reconciliation is what actually fixes it.
Related Services
This sits inside our Training practice. Related work: Annual Financial Statements where preparation and the audit file are outsourced, and Monthly Accounting and Reporting for the reconciliation discipline behind it.
