By Jyoti Kumra – get in touch
After years of auditing organisations of every size, one pattern holds up more consistently than any other: the difference between a smooth audit and a painful one has little to do with how complex the business is. It comes down to how well prepared they are before the auditor arrives. Businesses that treat audit preparation as a project, rather than a last-minute scramble, finish faster, pay less and carry far less stress through the process.
Start with the calendar, not the paperwork
Audit readiness starts with confirming the audit dates, the fieldwork window and the reporting deadline early, then working backwards from any AGM or filing date. That way the business is planning around the deadline rather than reacting to it.
Nominate one point of contact
The single most useful step is nominating one person who knows where everything lives and can answer or chase queries quickly. Audits stall when an auditor has to track down three different people for three different answers.
Close off the year properly
The year needs to be properly closed before fieldwork begins: the ledger finalised, accruals and prepayments in, and no journals still being posted into the period mid-audit. Alongside that, everything that should reconcile needs to reconcile, bank, payroll, debtors, creditors and GST, each with its supporting schedule ready to go. Unreconciled balances remain one of the most common causes of delay.
Clear the request list before fieldwork starts
Working through the auditor's request list before fieldwork, rather than during it, is where the real time saving happens. It frees the audit to focus on judgement areas rather than basic paperwork. Documents filed logically and digitally let the auditor self-serve instead of requesting each item one by one, and a short written summary of how key processes work helps them understand the business quickly rather than relearning it each year. Any unusual transaction or accounting change is best raised before fieldwork, not discovered as a surprise during it, and information is best handed over in one go rather than in instalments.
What documents are required for audit preparation
The exact list varies by business, but preparing for an audit is smoothest when a core set is ready in advance: draft financial statements under the correct reporting framework, whether that's NZ IFRS, NZ IFRS RDR, or PBE Standards for a charity or not-for-profit, along with direct read-only access to the accounting system or the general ledger and transaction listings.
Reconciliation workpapers for bank, investments, debtors, creditors, fixed assets, loans, accruals, prepayments, GST and inventory should be ready, alongside contracts or funding agreements for significant income streams. Payroll preparation covers payroll reports, the IRD summary report, leave reports and employment agreements, since auditors typically sample staff records. A fixed asset register and supporting invoices for major additions, and loan or finance agreements with current statements, round out the core set.
Charities and not-for-profits should also have their Statement of Service Performance ready, with the data behind each measure, plus board minutes and a related party and conflict-of-interest register.
Every hour spent waiting for documents, chasing information or re-auditing balances that changed mid-process ends up reflected in the fee. Good preparation removes that wasted time before it happens.
How better preparations reduces audit costs
Audit fees are driven largely by time. When information is ready before fieldwork, reconciliations are clean, one person is fielding queries and the year is properly closed off, fieldwork runs shorter and there is far less back-and-forth once the auditor leaves. Preparation also compounds: the systems and habits built for one audit tend to make every future one faster and cheaper again.
Mistakes that cost time and money
Leaving preparation until fieldwork begins puts the process on the back foot from day one. Providing information piecemeal forces the auditor to revisit the same areas repeatedly, and unreconciled or last-minute draft numbers lead to adjustments and extra review time. Small errors carried from year to year create rework, not having a single point of contact means queries bounce between people, and non-financial reporting, such as the Statement of Service Performance, is often overlooked until it holds up sign-off.
This client got it right in the end
Two organisations of almost identical size, worked with over several years, illustrate the point best. One treated its audit as something that happened to it, waiting until fieldwork to see what was needed, with documents trickling in over the following weeks. The pattern repeated every year, and so did the longer audit and higher fee.
Eventually, the business got ahead of it. One person took ownership of the request list, tidied up the reconciliations and had everything ready before fieldwork began. The on-site visit became a conversation about judgement areas rather than a document hunt. Audit time dropped, and so did the fee. Nothing about the business had changed. The only difference was preparation.
Want to reduce the cost and stress of your next audit
If you would like a copy of our audit preparation checklist or want to talk through what applies to your organisation, get in touch. A short conversation now can save considerable time and cost when audit season arrives.
