Whether preparing for a first external audit or navigating new regulatory challenges, building audit readiness is vital.
Being audited does not have to be overwhelming. Many growing companies ask how to be audit ready quickly whilst still focusing on business growth.
Whether preparing for a first external audit or navigating new regulatory challenges, building audit readiness is vital. It saves time, reduces risk, and reassures stakeholders that the business is well managed. For audit readiness for growing companies, the aim is to embed the right processes so that audits become routine rather than disruptive.
What Is Audit Readiness and Why Does It Matter?
So, what is audit readiness? In practice, audit readiness means being in a position to provide auditors with complete, accurate and timely information, supported by an audit trail that holds up to scrutiny. A clear audit readiness framework that follows audit trail best practices, sets out how the organisation manages audit controls and procedures, ensuring that financial reporting, governance, and compliance requirements can be evidenced without delay.
Understanding what audit readiness is essential for both small and large businesses. For example, a fast-growing business may lack formal processes but will still need to evidence control discipline and compliance with relevant standards. Without an audit readiness framework, management risks missing key audit documentation requirements or failing to demonstrate the financial audit compliance that regulators and auditors expect.
As the UK’s Financial Reporting Council (FRC) highlights, audit quality rests on robust preparation and transparent evidence. Knowing how to be audit ready quickly, and maintaining readiness throughout the year, allows businesses to avoid stress and respond confidently when auditors arrive.
5 Steps to Improve Audit Readiness Today
Step 1: Identify Organisational and Environmental Shifts That Impact Audit Readiness
Strong audit readiness begins with understanding what has changed inside and outside the business. Major organisational shifts – such as restructures, acquisitions, or new technology systems – can alter how transactions are recorded and how controls are applied. For instance, a new enterprise resource planning (ERP) system might streamline reporting but could also introduce gaps if controls are not configured properly.
Environmental factors affecting audits, such as supply chain disruption, inflation, or even geopolitical risks, can also impact financial assumptions. These changes must be assessed for their effect on financial reporting and the internal audit process. In parallel, the impact of regulatory changes on audits must be considered. For example, updates to international accounting standards may alter how revenue or leases are recognised.
A practical starting point is to review last year’s audit findings and ask: have those weaknesses been corrected? Documenting how changes influence processes, controls and reporting forms part of audit trail best practices and demonstrates accountability to auditors.
As Nicholas James, Audit Director at PKF BBA, notes:
“Audit readiness is not just about ticking off a list before the auditor arrives. It’s about embedding a culture of preparedness – anticipating organisational shifts, responding to regulatory changes, and documenting decisions so that your audit evidence and reporting process is watertight.”
Step 2: Create and Prioritise an Internal Audit Task List for Better Readiness
Once changes are understood, businesses need structure. An internal audit task list becomes the backbone of your audit readiness checklist. This is not simply a to-do list – it’s a strategic plan that aligns people, timelines, and responsibilities.
The best place to begin is by looking back. What requests or queries came up in last year’s audit? Were there delays in producing certain reconciliations, or challenges in explaining key estimates? Carrying those forward ensures no lessons are forgotten.
Next, overlay the organisational changes from Step 1. If you’ve expanded into a new market, for example, add tasks related to new revenue streams or tax rules. Then prioritise tasks according to significance and deadline, recognising that some areas – like year-end reconciliations – are critical and must be front-loaded.
Each task should be clearly owned. Assigning responsibility avoids the common problem of “shared accountability” where tasks fall through the cracks. It is also worth nominating a central liaison who will manage communications with auditors. This person should understand the internal audit process and be confident handling technical questions. Their role is key to ensuring that the internal audit checklist stays on track and that deadlines are met without stress.
Step 3: Engage Early with Auditors to Build Alignment and Reduce Risk
Early engagement with auditors is one of the most effective ways to reduce audit risk business-wide. Instead of waiting until year-end, arrange a planning session well ahead of the audit. This should cover organisational changes, new regulations, and the audit communication strategy for the year.
Sharing information at this stage prevents misunderstandings later. For example, if a business has adopted a new accounting standard, discussing interpretations with auditors in advance avoids disputes over treatments once the financial statements are drafted. Similarly, reviewing prior audit findings early shows that the company has acted on recommendations – an important part of how to prepare for a financial audit.
Agreeing on a timetable is also critical. Both parties should align on milestones, from interim testing to final reporting. Establishing regular check-ins, whether weekly updates during busy periods or ad-hoc sessions on specific risks, helps auditors feel engaged and keeps the business in control. Requesting an updated external audit preparation checklist from your auditors ensures you have full visibility of their requirements.
This type of proactive engagement signals maturity, especially for audit readiness for growing companies that want to demonstrate strong governance to potential investors or regulators.
Step 4: Prepare Clear Audit Documentation and Supporting Records
No matter how well tasks are planned, an audit will stall if documentation is incomplete. Audit documentation requirements are often more detailed than management anticipates. To avoid this, businesses should focus on preparing supporting records for audits throughout the year, not just at year-end.
A strong approach involves reconciling every account balance to independent evidence – whether that’s external bank statements, supplier confirmations, or internal registers. Each reconciliation should be dated, reviewed, and filed in a central repository so it can be produced quickly. This forms part of audit trail best practices and demonstrates robust audit controls and procedures.
Where judgements or estimates are made, such as impairment testing or revenue recognition, management should document the rationale clearly. This includes outlining the assumptions used, referencing supporting market data, and explaining why alternatives were rejected. Linking each assumption to evidence is a critical part of the audit evidence and reporting process.
Maintaining an audit document checklist for business teams to follow ensures nothing is missed. It also provides reassurance internally that financial audit compliance tips are being followed consistently.
Step 5: Monitor Audit Progress with Regular Check-Ins and Updates
Finally, audit readiness requires ongoing visibility. Once the audit is under way, businesses should establish a framework for audit progress tracking. This might include weekly progress reports, shared dashboards, or regular check-ins with department heads.
These updates should identify bottlenecks early, for example, if a reconciliation is delayed, management can investigate the root cause and assign extra support. By evaluating which stakeholders are impacted and the risk to the overall timetable, teams can implement solutions before problems escalate.
The internal audit process should also be dynamic. As new tasks emerge, the audit readiness checklist should be updated. This living document ensures that priorities, responsibilities, and timelines remain aligned. In practice, this approach transforms the audit from a once-a-year scramble into a manageable business process.
How to Stay Audit Ready All Year Round
Audit readiness does not end when the auditor leaves. Businesses that treat audit readiness as an ongoing strategy are able to respond to new risks quickly and maintain credibility with stakeholders.
One effective method is to use an audit control calendar. This sets out monthly or quarterly tasks such as reconciliations, control testing, and regulatory reviews. By following the calendar, the finance team knows how to be audit ready quickly if circumstances change.
Maintaining an internal audit checklist year-round embeds accountability. For growing companies, this discipline ensures that audit readiness supports wider business objectives, reduces audit risk, and strengthens investor confidence.
Audit Readiness Checklist: 5 Key Steps
If you’re looking for a quick reference, here’s an audit readiness checklist based on the five steps above. These points can help your business stay prepared and reduce audit risk:
- Identify changes – Review organisational changes in audit readiness (e.g. restructures, new systems, acquisitions) and assess environmental factors affecting audits. Document the impact of regulatory updates and prior audit findings.
- Build an internal audit task list – Create a structured list of audit preparation steps for small business or larger organisations. Prioritise tasks, assign clear responsibilities, and nominate a liaison for auditors.
- Engage early with auditors – Share organisational and regulatory changes, confirm interpretations of new standards, review how past issues were addressed, and agree on an audit communication strategy with milestones.
- Prepare documentation – Maintain a robust audit document checklist for business records. Reconcile balances, document assumptions, and follow audit trail best practices to support financial audit compliance tips.
- Monitor progress – Track audit progress with regular check-ins, spot bottlenecks early, update your internal audit checklist dynamically, and manage audit risk business-wide.
PKF Audit and Assurance Services
We provide full audit and assurance services including statutory and non-statutory audits, assurance reviews, and bespoke audit procedures. With particular expertise in regulated entities, charities, trading companies and private equity structures, we combine local knowledge with international reach through the PKF Global network.
To explore how we can support your business in becoming audit ready, contact David Moehle or Nic James.
Frequently asked questions
- What should be included in an external audit preparation checklist?
It should cover reconciled financial statements, supporting records, documented accounting policies, evidence of controls, and prior audit findings. A good external audit preparation checklist also confirms that regulatory changes have been addressed and that audit trail best practices are followed. - How do audit readiness frameworks help small businesses?
An audit readiness framework gives smaller organisations a structured approach to the internal audit process. It ensures audit preparation steps for small business are consistently applied, simplifies how to do an audit efficiently, and provides a clear audit document checklist for business teams. This reduces stress, supports financial audit compliance tips, and makes preparing for an external audit more straightforward.