How to Prepare for a Statutory Audit

The are a number of benefits associated with statutory audits. For example, your company will be provided with an outside perspective and feedback regarding the effectiveness of internal controls and processes. It will also enhance your confidence in the business.

If you are appointing an auditor for the first time, take a look at the steps below.

1 Define Your Company’s Needs

Why the are we appointing an auditor? You may be asking yourself this question. You may be legally required to have an audit or your shareholders may request one.

2 Do Your Market Research

Many large companies will put their audit out to tender. Such a formal process may not suit smaller firms, so it may be more appropriate to meet a number of prospective auditors to discuss your company’s requirements. Meeting with prospective auditors is a useful way to gauge their working and communication style.

Appoint An Auditor

The directors usually appoint the first auditor; they are then appointed or reappointed at each AGM. The Companies Registration Office maintains a register of all those individuals and firms that are appropriately qualified to provide statutory audit services.

4 Prepare of the Audit

To ensure that the audit process is as efficient and effective as possible, you should engage as early as possible with the auditor to agree a timeline and prepare the relevant records. The auditor may be able to assist you with these final preparations, although there are limits, due to independence rules, as to what the auditor can do.

The auditor will generally arrange a planning meeting. An engagement letter will issue, which sets out the respective responsibilities of the auditor and the director. This should be reviewed carefully. Ask the auditor to explain any terminology that you are not familiar with.

5 Final report

A final statutory audit report setting out the auditor’s opinion will issue to the members of the company. The key findings and shortcomings noted in the company’s internal controls and processes will be outlined, providing you with insight into the business and a deeper understanding of the potential risks you may be exposed to.

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