How to Prepare for a Financial Review or Audit: A Practical Guide for Business Owners

Preparing for a financial review or audit doesn't have to be stressful. With the right strategy and preparation, your business can navigate the process smoothly, avoid costly errors, and even uncover valuable insights. Whether you’re facing a routine financial review or a full-scale audit, this article will walk you through the key steps to get your books clean, your documents organized, and your team ready.

Why It Matters

Lenders, investors, and regulatory bodies often require a financial review or audit to ensure the accuracy and reliability of your financial statements. But even when not required, going through the process can help you improve your internal controls, catch errors early, and gain a better understanding of your financial health.

1. Start by Cleaning Your Books

Before auditors or reviewers come in, take time to get your books in order. This ensures the numbers tell a clear and accurate story.

Reconcile All Accounts

Make sure all bank accounts, credit cards, and loans are fully reconciled. Investigate any unusual or outdated transactions.

Tidy Up the Chart of Accounts

Clean up any duplicate or unused accounts, and verify that every transaction is categorized correctly.

Review Receivables and Payables

Match outstanding invoices and bills to actual payments. Resolve old balances, write off uncollectible debts, and make sure vendor records are accurate.

Post Accruals and Adjustments

Don’t forget to record prepaid expenses, deferred revenue, depreciation, and other necessary adjusting entries.

2. Organize Your Documentation

Good documentation is critical to a successful audit or review. Have these materials ready and clearly labeled:

• Bank statements and reconciliations

• Loan and lease agreements

• Payroll reports and tax filings

• Aging reports for accounts receivable and accounts payable

• Fixed asset register and depreciation schedules

• Inventory reports, if applicable

• Prior tax returns and IRS correspondence

Digital organization works best—create folders for each financial statement line item so supporting documents are easy to find.

3. Review Internal Controls

Auditors will assess how your business manages financial risk. Prepare by documenting your processes for:

• Approving expenses and signing checks

• Managing cash flow and revenue recognition

• Safeguarding assets and inventory

• Assigning responsibilities to prevent fraud (segregation of duties)

If you’ve recently improved or changed your procedures, note what was done and why.

4. Communicate with Your CPA Early

Don’t wait until the audit begins to ask questions. Contact your CPA ahead of time to:

• Clarify what documents they'll need

• Discuss any major financial changes during the year

• Review prior audit findings or areas that raised concern

• Request a pre-audit checklist or planning meeting

The more proactive you are, the more smoothly the process will go.

5. Conduct a Pre-Audit Review

Before the official start of the audit or review, perform your own internal check:

• Re-run key reports and compare them to your general ledger

• Identify and explain any large or unusual transactions

• Ensure all adjusting journal entries are posted and documented

Assign someone on your team to be the point of contact and make sure all staff involved know their responsibilities.

Final Thoughts

An audit or review isn't just about compliance—it's a chance to showcase the strength and accuracy of your financial management. By keeping your records clean, your documents organized, and your team prepared, you’ll make the process easier for everyone involved and come away with a clearer picture of your business’s financial health.

Need help getting ready? Our team specializes in audit and review support. We can help you organize, reconcile, and prepare—every step of the way.