Audit Preparation

  • Preparation of draft financial statements and disclosures to be audited or reviewed by the auditor/accountant.

  • Preparation of working papers on behalf of the company with the necessary account analysis, adjustments to the books and records and working paper support to be provided to the auditor/accountant.

  • Interaction with the auditor/accountant to respond to inquiries and provide information on behalf of the company.

  • Allows the company to minimize distractions and delays during the audit or review so management may focus on its business at a cost significantly lower than if the auditor/accountant had to perform such work (if permitted).

An auditor (or accountant that performs a review) must remain independent of a client and may not take responsibility for the financial statements on which they form an opinion. The responsibility for financial statement presentation lies with the company’s management - it is management’s representation and this is stated in the auditor/accountant’s report.

In general, your auditor or reviewer may be prohibited by independence standards from helping your company get ready for an audit or review. What they can do will likely be at a rate significantly higher than I could charge.

Engaging a CPA consultant to help get your company ready for an audit can reduce audit fees and audit time as an experienced consultant can prepare the documents, draft financial statements, and working papers needed by the auditor so the disruption to management and staff may be minimized. I have many years of experience preparing entities for audits and reviews, including closing the books accurately and quickly, and in conducting audits and reviews.

Examples of services an auditor or reviewing accountant may not perform:

  • Record entries to the general ledger unless client management has determined or approved the account classifications for the transaction;

  • Authorize, execute or consummate transactions on behalf of a client;

  • Prepare or make changes to source documents;

  • Determine or change journal entries, classification of transactions or any other accounting records without client approval;

  • Sign or cosign a client’s checks;

  • Generally, authorize payment of clients funds;

  • Maintain bank accounts, have custody of funds or make credit or banking decisions;

  • Approve vendor invoices for payment;

  • Accepting responsibility for the preparation and fair presentation of the client’s financial statements;

  • Designing, maintaining or implementing internal controls, including the performance of ongoing monitoring activities for a client; or

  • Hire or terminate employees

This list is not all-inclusive. But, in summary, the auditor may not assume the role and duties of management.