Audit readiness: what to prepare before fieldwork starts

An audit rarely runs late because of the audit. It runs late because the accounts were still open when the auditors arrived, the schedules did not agree to the ledger, and the supporting documents were spread across three inboxes and someone's laptop. Readiness is mostly a scheduling decision made several weeks earlier.

What readiness actually means

An auditor needs to get from a figure in the financial statements to the evidence behind it, without help, and to repeat that journey for every material balance. Everything below exists to shorten that journey. When it is short, fieldwork is quiet and questions arrive in batches. When it is long, the team spends the audit reconstructing records instead of answering questions, and the cost of the audit rises for reasons that have nothing to do with the auditor.

Whether your company requires a statutory audit at all depends on how it is classified under the Companies Act and the rules the SECP applies to that class. Confirm your position rather than assuming it, particularly if the business has grown, changed structure or taken on outside investment since the last review.

Close the accounts before you hand anything over

A trial balance that is still moving is the single most common cause of repeated work. Anything the auditor tests against a figure that later changes has to be tested again. Before you hand over anything, finish the bank reconciliations, post payroll for every period, review receivables and payables, complete the inventory work and put through the period end adjustments.

Then stop. Agree a cut-off date internally and treat later corrections as a controlled list with an owner, rather than quiet edits to the ledger. If a material error surfaces after the cut-off, raise it with the auditor directly. Finding it yourself and disclosing it reads very differently from it being discovered.

Every material balance needs a schedule that agrees

For each significant balance, prepare a supporting schedule whose total matches the trial balance exactly. Not approximately. A schedule that is out by a small amount generates a query, and the query costs more time than the reconciliation would have.

The schedules worth preparing in advance usually cover cash and bank, trade receivables with an ageing, trade payables, inventory, fixed assets with additions and disposals for the period, accruals and prepayments, loans and related party balances, and payroll. If a balance is material and unusual, assume it will be looked at closely and prepare accordingly.

Put the evidence where someone else can find it

Centralise the supporting documents in one controlled folder structure before fieldwork: contracts, sales and purchase invoices, bank statements for the full period, tax records, payroll records, board and management approvals, and lease or financing agreements.

Two details make a disproportionate difference. Name files so that someone who did not create them can find them, which usually means a date, a counterparty and a document type rather than a reference only your team understands. And set access deliberately, so the audit team can read what they need without being sent individual files one at a time.

Write down the judgements while you still remember them

Provisions, impairment, useful lives, accruals, bad debt estimates and revenue cut-off all involve judgement, and judgement is what an auditor examines most closely. For each one, keep the calculation and a short written rationale: what was assumed, what evidence supports it, and why the number is what it is.

Write these at the time. A rationale reconstructed months later, under question, is weaker evidence and takes longer to produce than it would have taken to note originally.

Give every request an owner

Audit requests stall when they belong to everyone. Keep a single tracked list with a named internal owner for each item, the date requested, the current status and where the final evidence was filed. One person should own the list overall and be the route through which questions and documents pass.

This also prevents the most avoidable form of duplicated work, where two people answer the same request differently and the difference itself becomes a query.

The checklist

1. Confirm whether a statutory audit is required for your company class, and the reporting deadline that applies.
2. Agree an internal close cut-off date and finalise the trial balance.
3. Complete bank, receivable, payable, inventory and payroll reconciliations.
4. Prepare lead schedules that agree to the trial balance exactly.
5. Collect contracts, invoices, bank statements, tax and payroll records, and approvals into one structured folder.
6. Document every accounting estimate with its calculation and rationale.
7. Prepare related party balances and transactions, and the disclosures that go with them.
8. Assign a named owner to every audit request and track status centrally.
9. Identify known problem areas in advance and raise them yourself.

What goes wrong most often

• The ledger keeps moving during fieldwork. Work already done has to be redone, and confidence in the records drops.
• Schedules do not tie to the trial balance. Small differences generate queries out of proportion to their size.
• Evidence lives in personal inboxes. When the person who holds it is on leave, the request stops.
• Estimates have a number but no reasoning. The figure may be perfectly reasonable and still be challenged, because nothing explains it.
• Known issues are left to be discovered. Raising them yourself is nearly always the better position.
• Preparation starts when fieldwork starts. The work is the same either way, but doing it under time pressure introduces errors.

Records worth keeping year round

Most of audit readiness is bookkeeping that was already done properly. Monthly reconciliation, a clean separation between business and personal money, filed contracts and a documented approvals trail turn preparation into a review rather than a reconstruction. Our bookkeeping guide covers the underlying routine, and monthly management accounts tend to surface the reconciliation gaps long before an auditor would.

When professional help makes sense

Bring in support when the records do not reconcile and the cause is not obvious, when the business has been through a structural change such as incorporation or an acquisition during the period, when material estimates need a defensible basis, when more than one tax or regulatory authority may be involved, or when the deadline is close and the close is not finished. The earlier that conversation happens, the more of it can be planning rather than remediation.

Esperta provides assurance support, accounting and bookkeeping, and preparation and review of financial statements for businesses in Pakistan.

This article is general information, not legal, audit or tax advice. Requirements, thresholds and deadlines can change, and they depend on your company's classification and circumstances. Confirm the current position with the relevant authority, or with us, before acting.