Understanding Business Audits: What They Involve and How to Prepare
Worried about an upcoming audit? With the right preparation and a clear understanding of what’s involved, your audit process can be far less stressful.
At Hartley Fowler, we provide professional audit and assurance services that help businesses of all sizes meet statutory obligations, manage risk, and build stakeholder confidence. Whether you’re facing your first statutory audit or preparing for due diligence, our experienced team can guide you through every stage with precision and insight.
Read on to learn more about business audits and discover the steps your company can take to prepare effectively for one.
What is a Business Audit?
A business audit is an independent review of a company’s financial statements, systems and controls. Its purpose is to ensure that the company’s financial position is accurately represented and complies with applicable laws and accounting standards. These audits help your business to prevent fraud and manage risk.
Audits may be either statutory, which are required by law, or voluntary, which are carried out by choice. A voluntary audit is usually undertaken to reinforce stakeholder trust and to provide reliable insights into your business performance. A clean audit report can boost your credibility with investors and lenders.
Who Needs a Business Audit?
Statutory audits may be a legal requirement for your company. You must have an audit if:
- You are part of a larger group that exceeds the thresholds
- You are a public limited company (PLC)
- You are in a regulated sector, such as financial services or charities
- Shareholders holding at least 10% of shares request one
- It’s required under the terms of a loan, grant, or investor agreement
Even if a statutory audit is not required, businesses often benefit from our audit services in areas such as due diligence when acquiring another business or when specialist support is needed for regulatory compliance or internal risk assessment. Many owners choose a voluntary audit to improve transparency and strengthen internal controls.
If your business requires an annual statutory audit, we are able to help. We provide tailored audit and accountancy services for charities, solicitors and businesses in regulated industries.
What Happens During an Audit?
Here’s what you can expect during an audit:
- Planning and Risk Assessment
The auditor will learn about your business operations, internal controls and financial risks. They’ll design an audit approach tailored to your sector and business model. - Fieldwork
This involves testing your financial records, such as invoices, payroll data, tax filings, and bank reconciliations, to ensure accuracy and consistency. The auditor may also interview key staff or observe internal processes. - Evaluation
Auditors assess whether your financial statements comply with UK accounting standards. They may flag discrepancies or areas of concern, such as weak internal controls or inconsistent reporting. - Audit Report Issued
Upon completion, you’ll receive an audit opinion. A clean or unqualified opinion means your financial statements give a true and fair view. A qualified opinion may highlight issues that need attention.
How to Prepare for a Business Audit
Preparing properly can make the process faster and less stressful. Here’s how:
Get Your Records in Order
Make sure your financial documents are up to date and well-organised. This includes:
- General ledger and trial balance
- Bank statements and reconciliations
- Sales and purchase invoices
- VAT returns
- Payroll records
- Fixed asset register
Review Your Internal Controls
Auditors assess how you manage risk and ensure accuracy in your accounts. Be ready to demonstrate approval processes, segregation of duties and record-keeping procedures.
Involve Your Accountant Early
If you work with an external accountant or an in-house finance team, involve them as early as possible. We can help you identify potential issues in advance and ensure your systems are audit-ready.
Prepare Your Team
Let relevant staff know the audit is happening and encourage openness and cooperation. The audit is not about catching people out, but about validating the business’s financial integrity.
Our Audit and Assurance Services
We offer a wide range of services designed to meet the audit and compliance needs of UK businesses and organisations. These include:
- Statutory Audit Services
- Independent Examination and Accounting for Charities
- Compliance Advice for Solicitors
- Regulatory and Accounting Compliance Reports
- Due Diligence Audits
- Forensic Accounting Services
Looking for Reliable Accounting and Auditing Services?
Contact us today to discover more about our services and gain expert advice from our team on how you can prepare for your audit.