Audit readiness in 2026: nine areas CFOs should address before the auditor arrives

The audit date is in the diary, the finance team knows it is coming and the auditor has sent the information request.

So why does audit preparation still seem to become a last-minute scramble?

In our experience, it is rarely because the underlying financial information does not exist. More often, it is because the supporting evidence, explanations and documentation have not been pulled together until the auditor asks for them.

And that can turn a relatively straightforward audit into a much more time-consuming exercise for everyone involved.

Good audit preparation is not about having a perfect folder ready on day one. It is about identifying the areas most likely to require explanation and making sure the evidence is there before you need it.

We’re exploring some of the areas and core documents CFOs should be thinking about now.

1. Prepare evidence, not just information

One of the most common causes of audit delays is not missing information, but incomplete evidence.

A ledger extract, trial balance or invoice may answer part of a question without addressing what the auditor is actually trying to verify. Taking time to understand the purpose of key audit requests and providing supporting evidence alongside the underlying data can significantly reduce follow-up queries and speed up the audit process.

Increasingly, evidence exists within systems rather than physical documents. Before fieldwork begins, consider whether key approvals, contracts and decisions can be readily extracted and shared with the audit team.

Balance sheet reconciliations are an obvious starting point, but a completed reconciliation does not necessarily mean an account is audit-ready.

Your auditor may want to understand why a balance has moved significantly from the previous year, whether an unusual transaction has been correctly accounted for, or what sits behind an unexpected year-end balance.

Audit checklist: Before the audit starts, take a step back and ask:

• Are all material balance sheet accounts reconciled?
• Can you explain significant movements against the prior year?
• Are old or unusual balances supported by appropriate evidence?
• Have reconciling items been investigated rather than simply carried forward?
• Is the supporting documentation easy for someone outside the finance team to understand?

2. Your key accounting judgements need more than a number

Some of the areas most likely to attract audit attention are also the ones where there is no single ‘right’ answer.

Think about impairment, provisions, valuations, revenue recognition or going concern.

The important thing is not simply documenting the final figure, it is being able to demonstrate how management arrived at it.

That means keeping a clear record of the assumptions used, the evidence considered and, where appropriate, the alternative scenarios that were discussed. You do not need a 30-page paper for every judgement, but you should be able to explain why you believe your accounting treatment is appropriate.

3. Have you documented significant transactions?

Major transactions rarely happen in isolation. There may be contracts, board papers, valuations, legal documents or correspondence sitting across different parts of the business.

Before the audit, make sure the documentation supporting significant transactions is available and that the finance team understands the commercial context.

This is particularly important for acquisitions, disposals, new financing arrangements, major contracts or other transactions outside the normal course of business.

4. Don’t forget what is happening outside the finance team

One of the easiest things to overlook is information that does not naturally make its way into the finance function.

One of the key areas is related party transactions –

Related party disclosures continue to attract significant audit attention. The challenge is often not identifying transactions recorded in the accounting records, but ensuring that all relevant relationships and arrangements have been captured.

Before the audit begins, consider whether there have been any transactions involving directors, shareholders, group companies or connected parties that may require disclosure.

In addition, during the year, has the business:

• Entered into a significant new contract?
• Taken on new finance or changed its borrowing arrangements?
• Acquired or disposed of an asset or business?
• Taken out a new lease commitment?
• Experienced a cyber incident or significant systems disruption?
• Become involved in a legal dispute?
• Changed its employee incentive arrangements?
• Made a significant commitment that has not yet appeared in the accounts?

The finance team may know that something happened, but what matters here is whether the auditor has the documentation and context needed to understand its financial impact.

5. Give your fixed asset register a reality check

Fixed assets can be easy to overlook until someone starts asking questions about them.

For audit readiness, check that significant additions and disposals have been recorded correctly, supporting invoices are available and the register still reflects what the business actually owns, controls and uses.

If you have undertaken significant capital projects during the year, make sure there is a clear rationale for what has been capitalised and why.

6. Don’t leave debtors and creditors until the last minute

Old or unusual debtor and creditor balances are often a source of audit questions.

Take some time before fieldwork to review outstanding balances and investigate anything that needs an explanation.

• For debtors, consider whether significant balances remain recoverable.
• For creditors, consider whether there are costs relating to the year that have not yet been invoiced.

It is much easier to resolve these questions before the audit starts than while the audit team is waiting for an answer.

7. Start your going concern work early

Going concern should not become an unexpected request during fieldwork.

Your budgets, forecasts, cash flow projections and financing arrangements will already provide much of the underlying information. The important thing is to bring it together and document the assumptions behind management’s assessment.

Consider what happens if revenue falls short, costs increase or financing arrangements change. Understanding the headroom in different scenarios will also help you have a more useful conversation with your auditor.

And don’t forget that the going concern assessment extends to at least twelve months from the date the financial statements are approved, not the balance sheet date. Ensure your forecasts either operate on a rolling basis or extend sufficiently beyond the anticipated signing date to support management’s assessment.

8. Look at what happened after year end

Year-end does not mean the story stops. Review significant events after the reporting date, including:

• Major receipts or payments
• Significant contract changes
• Legal developments
• Acquisitions or disposals
• Changes to financing arrangements

Some may provide useful evidence about the position at year end; others may need to be disclosed or considered separately.

9. Identify the information only one person knows

This is one of the simplest (and most overlooked) areas of preparing for an audit.

Every business has information that effectively belongs to one person. That becomes a problem when the auditor asks for it and that person is unavailable.

Before fieldwork starts, identify where knowledge or documentation is concentrated and make sure important information is accessible to the wider team.

The most efficient audits are prepared well before the audit starts

At Verallo, our Audit team takes the time to understand the businesses we work with and the context behind the numbers. We aim to make the audit process as clear, practical and straightforward as possible, not simply arrive at year end with an audit checklist.

If your next audit is approaching, speak to the Verallo Audit team about how we can help you prepare.