A financial audit, whether statutory or voluntary, is an in-depth review of a company’s financial statements and internal processes. For UK SMEs, audits may be required if you exceed certain thresholds—or you may choose one to strengthen investor or lender trust. Here’s how to prepare effectively.
1. Understand Audit Requirements
In the UK, private limited companies must undergo an audit if they exceed two of the following:
- £10.2 million turnover
- £5.1 million in total assets
- 50 employees
Even if not required, audits can be useful when seeking funding or preparing for acquisition.
2. Get Organised Early
Start preparation months in advance. Compile all necessary documents:
- Trial balances
- Bank reconciliations
- Invoices and receipts
- Payroll records
- Tax filings
Have these ready and accessible to save time and minimise back-and-forth during the audit.
3. Ensure Clean Bookkeeping
Accurate, up-to-date records reduce audit queries and potential adjustments. Reconcile all accounts, fix discrepancies, and ensure consistent accounting treatments. Ideally, use cloud accounting software for easy access and audit trails.
4. Review Internal Controls
Auditors assess not just the numbers, but also your processes. Have clear policies for approvals, expense claims, and access to financial systems. Weak controls may lead to a management letter or further scrutiny.
5. Communicate with Your Auditor
Engage with your auditor early to understand their requirements. Provide requested materials promptly and clarify timelines. A collaborative relationship ensures a smoother audit process.
6. Prepare Your Team
Inform relevant staff about the audit and their role in providing information. Assign a point person (usually your finance lead or accountant) to coordinate communications and submissions.
Good preparation not only makes the audit smoother—it strengthens your financial governance and improves stakeholder confidence. Whether it’s mandatory or strategic, approach audits with diligence and professionalism.