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Audit Readiness: A Checklist Before Your Auditors Arrive

An audit readiness checklist for South African businesses: what auditors ask for, the schedules to prepare, the reconciliations that must balance, and the fees.

Rishen Narsing, CA(SA)Rishen Narsing, CA(SA)Updated 5 min read
Year end schedules and supporting documents assembled for an external audit
Photo: Unsplash

Key takeaways

  • Auditors charge for time, so preparation is the only reliable way to reduce the fee.
  • Whether you need an audit, an independent review or neither depends on your public interest score.
  • Every material balance needs a schedule that agrees to the trial balance and to third party evidence.
  • Start eight weeks before year-end, not the week the auditors arrive.
  • Last year's adjusting journals are the best predictor of this year's audit findings.

An audit is a fixed amount of evidence gathering. The only variable is who does the preparatory work: you, at your own cost and pace, or the audit team, at their hourly rate under deadline. That is the entire economics of audit readiness, and it is why the same company can pay materially different fees in consecutive years for the same scope.

This checklist covers what to establish before you start, the schedules to prepare, the reconciliations that must balance, and the conversations worth having with your auditor early.

First, confirm what you actually need

Not every South African company is audited. The requirement is driven by the Companies Act and the Regulations, principally through the public interest score, calculated from average employees, third party liabilities, turnover and the number of holders of beneficial interest.

Broad positionTypical requirementAlso check
Higher public interest scoreStatutory auditWhether the MOI imposes anything further
Middle band, independently compiled statementsIndependent reviewWho compiled the statements, and their independence
Middle band, internally compiled statementsAudit may be triggeredThe compilation question is decisive here
Owner-managed, all shareholders are directorsOften neither audit nor reviewThe exemption has conditions, confirm them

Eight weeks before year-end: the physical work

Some evidence cannot be recreated after the fact. If you miss these, the auditor either qualifies the area or does expensive alternative procedures.

  1. 1Plan the stock count. Date, teams, count sheets, cut-off procedures for goods in transit, and an invitation to the auditor to attend.
  2. 2Run a [fixed asset verification](/blog/fixed-asset-verification-south-africa/). Physically confirm assets exist, are in use, and match the register.
  3. 3Request third party confirmations where relevant: banks, attorneys, major customers and suppliers, and loan counterparties.
  4. 4Review debtors for recoverability and document the basis of any expected credit loss provision.
  5. 5Identify unusual transactions in the year and prepare the reasoning now, while people still remember: disposals, new finance leases, related party loans, restructures.
Supporting agreements and confirmations being assembled into an audit file
Confirmations and agreements are the evidence auditors cannot generate themselves.

The audit file: one schedule per material balance

The deliverable is not a shoebox of documents. It is a structured file where every material line of the trial balance has a schedule that agrees to the ledger and is supported by evidence.

AreaSchedule to prepareSupporting evidence
BankReconciliation per account at year-endBank statements and bank confirmation
DebtorsAge analysis agreeing to control account, plus provision workingsPost year-end receipts, credit notes
StockValuation by line, agreeing to the countCount sheets, costing basis, obsolescence review
Fixed assetsRegister with additions, disposals and depreciationInvoices for additions, verification results
CreditorsAge analysis, plus a search for unrecorded liabilitiesSupplier statements, post year-end payments
VAT and PAYEControl account reconciliationsVAT201s, EMP501 reconciliation, SARS statement of account
RevenueMonthly analysis with cut-off testing at year-endContracts, delivery evidence, credit notes after year-end
Loans and leasesAmortisation schedule and covenant positionAgreements, statements
TaxComputation reconciling to the ITR14Provisional tax payments, prior assessments

8 wks

Lead time before year-end to start

1

Schedule per material balance

0

Target unexplained reconciling items

Prior yr

Best predictor of this year's findings

Read last year's audit before this year's starts

The management letter and the list of adjusting journals from the previous audit are the cheapest audit preparation available. If the auditor raised the same control weakness two years running, expect them to test it harder in the third. Work through last year's points, fix what is fixable, and document what was decided for anything you chose not to change.

Auditors are not looking for perfection. They are looking for evidence that someone competent has already reviewed the numbers. Give them that and the whole engagement gets shorter.

Rishen Narsing, CA(SA)

During fieldwork: how to keep it short

  • Nominate one contact person who owns the query list. Auditors chasing four people in parallel is how a two-week audit becomes six.
  • Track queries in a single shared list with dates and owners, and clear them daily.
  • Do not renegotiate the numbers mid-audit. Post-fieldwork changes to the trial balance re-open completed work.
  • Ask for adjustments as they arise, so you can assess them rather than seeing a list at the end.
  • Book the sign-off meeting up front, with the CIPC filing deadline in mind.

After the audit: bank the improvement

The end of an audit is the best moment to improve the process, because the pain is fresh and the findings are specific. Turn every adjusting journal into a change in the month end close, and every control finding into a documented procedure.

Related reading: confirm first whether you need an audit at all in independent review vs audit, and expect the auditor to test the financial controls that stop fraud in a small business.

How Synergy helps

Our close, consolidate and report service includes audit readiness: building the file, preparing the schedules, and acting as the single point of contact for auditor queries. We prepare, your auditor audits, and the independence line stays clear. Where the statements themselves are needed, our AFS preparation service produces them in Caseware, and technical positions are supported by our technical accounting service.

Year-end coming up?

Book a free consultation and we will review your readiness against this checklist and tell you what is missing.

Book an Audit Readiness Review

Frequently asked questions

  • #Audit
  • #Year-end
  • #Compliance
  • #Reconciliation
  • #AFS
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Rishen Narsing, CA(SA)

Written by

Rishen Narsing, CA(SA)

Founder, Synergy Financial Management

Rishen Narsing CA(SA) is a finance and business leader with over a decade of experience supporting companies through growth, complexity and change. With experience across multiple industries, entities and international markets, he brings together financial discipline, strategic thinking and operational execution to help business owners and leadership teams understand their numbers and make informed decisions with confidence. Through Synergy Financial Management, clients gain a strategic finance partner invested in the performance of their business.

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