How an accounting professional can support your first audit
April 20th, 2023
A financial statement audit is an important milestone in a company’s lifecycle and typically indicates a new stage of growth through external financing or capital injection from investors. Despite its importance, many growing companies are never fully prepared for their first financial statement audit. This is because they often prioritize functions like sales, marketing, and operations over GAAP reporting. But when that first audit comes, it’s critical to be prepared to avoid a prolonged and often expensive process.
Working with an accounting advisory firm like Siegfried Advisory puts businesses in a position of strength as they prepare for their first financial statement audit and as they continue growing. Below are a few of the audit areas a Siegfried Advisory professional can assist with.
Conduct a preliminary review of the financial information and workpapers
A preliminary review of internal financial statements and supporting workpapers by an accounting professional will help identify potential issues or areas of concern that could impact the outcome of the audit. Usually, this review pinpoints areas where extra support is needed or where adjustments need to be made so the company complies with GAAP. The most common issues for first-time auditees stem from insufficient support for specific GAAP areas such as leases, accruals, and revenue recognition.
Assist with the preparation of financial statements
Most financial statement audits aim to produce a set of financial statements that are fairly stated in accordance with GAAP. Some financial statement auditors take on the task of preparing the financial statements and footnotes for the auditee, while other auditors require the auditee to prepare the statements themselves. Often, controllers and CFOs are not familiar with the latest GAAP disclosure language and requirements because keeping up with these dynamic changes is not a part of their regular responsibilities. For companies that need to prepare financial statements with footnotes, an accounting professional is an excellent resource who can work directly with the in-house accounting team to get everything together for the auditors without taking too much time away from day-to-day operations.
Develop and implement accounting policies, procedures, and workpapers
One of the key requirements for a successful financial statement audit, as well as a successful finance function, is the existence of robust accounting policies, procedures, and supporting workpapers.
An accounting professional can assist with the development and implementation of these documents. They can work directly with a company’s accounting to help ensure that these are tailored to the specific needs of the company and that they are aligned with the relevant accounting standards and the supporting workpapers that provide clear guidance on how financial transactions are recorded.
Provide training to accounting staff
It is important that the company’s accounting staff are fully aware of the accounting policies, procedures, and workpapers that have been developed to support the company’s financial functions. An accounting professional can provide training to the accounting staff, helping them understand how to implement everything effectively so that financial transactions are recorded accurately and the financial statements are prepared in accordance with the applicable accounting standards for current and future reporting periods.
Liaise with auditors
An accounting professional can play a critical role in liaising with the auditors. Accounting professionals who specialize in audit readiness will generally be former auditors and have an excellent idea of what the auditors want and why, making them the perfect liaison. The professional will ensure that auditors have appropriate access to necessary information and that any issues or concerns are identified and addressed promptly. This will help ensure the audit process runs smoothly from start to finish.
A unique perspective
An accounting advisory firm, like Siegfried Advisory, can help with audit readiness and support. Engaging specialized support in this area can reduce the likelihood and magnitude of out-of-scope audit fees, condense the time required for audit procedures and follow-up, and allow the internal accounting team to maintain focus on supporting the ongoing operations of the business.
Please get in touch with our team to learn more about our unique perspective and individualized approach. We’d be thrilled to help support your upcoming financial statement audit.
This article was contributed by John Peatross, Manager in Financial Advisory Services at Siegfried Advisory. You can contact John directly at [email protected].