How to Prepare for a Financial Audit
The word “audit” might send a chill down your spine, but it doesn’t have to. With the right preparation and mindset, a financial audit can actually be a great opportunity to tidy up your records and gain peace of mind.
What is a Financial Audit?
An audit is a formal review of your financial records to ensure everything is accurate and compliant. It can be conducted by external auditors or the IRD and might be random or triggered by discrepancies.
Steps to Prepare
- Get Your Records in Order
Ensure your receipts, invoices, bank statements, and payroll records are organised and easily accessible. Digital records make this much easier—especially if you’re using accounting software. - Check for Consistency
Make sure your financial statements match up with your bank accounts and GST returns. Any differences should be explainable and documented. - Review Past Returns
Look over your previous tax or GST returns. If there are errors, it’s better to correct them early than have them found during the audit. - Consult Your Accountant
If you’re unsure whether you’re audit-ready, check in with your accountant. They’ll help you spot red flags and make sure you’ve got all the bases covered.
Why It’s Worth It
Audits can highlight areas where your processes can improve and reduce the risk of future penalties. Being prepared not only makes the process smoother but also shows you take your financial obligations seriously.
