Preparation Tips for your Year End Audit

A tumultuous year is quickly coming to an end, which signals a time of rest and relaxation for many. If you are a CFO, Controller, or private industry accountant, the end of the year might not bring you as many warm and fuzzy vibes as the rest of the world. To help reduce some of the stress and anxiety the end of the year can bring, we have gathered three tips to help you prepare for your 2022 audit.

1. Review your monthly activity: Be on the lookout for any lease payments that are being made. If you have missed our previous posts, Financial Accounting Standards Board (FASB), Accounting Standards Codification (ASC) 842, Leases is effective for privately held business for their December 31, 2022 financial statements. A quick refresher on the new standard can be found here.  After you have gathered all of your lease documents in one spot, be sure to share the details with your auditors. This may allow them to get to work on your assessment and avoid significant changes after the year is closed.
2. Review your previous year audit deliverables: There is a chance your auditors communicated items that were noted during their previous audit in formal communications. Documents such as the governance, management or internal control letters could indicate a potential significant deficiency or material weakness. These letters may also list all journal entries posted during the course of the audit, along with any entries that may not have been material enough to post, but were large enough to communicate to governance. Review these items and work to address the issues before year end. Communicating the steps that have been taken by your team to address these items is sure to make the audit go smoothly.
3. Review variances from prior year: Take note of material differences from your prior year financial statements. Knowing the cause of the variance and having supporting documentation prepared can prime you for questions from your audit team. In addition, be sure to identify any significant or unusual transactions. Discussing these potential items with your auditor in advance gives them the opportunity to properly plan their required audit procedures.