Before you sign the audit report: five questions to ask your auditor.
What to check in the draft, which remarks need a reply, and when to ask for more time.
By the partners · 2 min read
An audit ends with a report, and the report carries your company’s name. Before it is signed, you will usually see a draft. These five questions help you read it with care, and raise anything that needs raising while there is still time.
Is the report clean, or does it carry remarks?
Start with the opinion paragraph. A clean report says the accounts give a true and fair view. If the draft carries a qualification, or a paragraph that draws attention to a particular matter, ask what led to it and whether anything can still be done before signing.
Which observations need a reply from you?
Points that are not serious enough for the report often go into a separate letter to management. Some only need noting. Others need a written reply. Ask your auditor to mark which is which, and agree a date for your replies.
- Observations that ask for a written response
- Observations that only need to be noted for next year
- Anything that needs a board decision
Have the agreed adjustments reached the final accounts?
During the audit you may agree to correct a few entries. Check that every agreed change has been made in the final accounts, not only in the draft you discussed.
| What to check | Where to find it |
|---|---|
| Qualifications or other remarks | The opinion and the paragraphs just after it |
| Points that need your reply | The letter to management |
| Agreed corrections | The final accounts, against the draft |
| Related-party details | The notes to the accounts |
Ask for the draft early. A day to read it is worth more than a week to correct it.
Are the related-party disclosures complete?
Transactions with directors, their relatives and group companies need to be disclosed in the notes. If anything has changed during the year, such as a new company or a new director, make sure it is reflected.
What should change before next year?
End the closing meeting by asking what would make next year’s audit smoother. Small changes, such as a monthly reconciliation or a better file of agreements, often save the most time.
This note is general information, not advice for your situation. Rules and dates change, so please write to the firm before acting on it.