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Three things you need to check when you prepare for your end of year finance audit

by , 13 November 2014
With the end of the year fast approaching, it's time for your annual audit. Not only do these audits mean you have to spend a lot of time preparing, you also have to fork out more cash to pay for the whole process.

But, if you adjust your finances and prepare everything properly beforehand, you can save time and money.

When you do this, ensure you check these three things...


When you do your year-end financial adjustment, check these three things

1. Check the journals for year-end adjustments and reversals
This includes:
- Accruals for fixed monthly expenses;
- Accruals for other expenses;
- Depreciation;
    • Depreciation method:
       Basic depreciation
       Reassessing the useful life of your assets
    • Residual value
    • You must make allowances for bad debt
    • Inventory adjustments
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2. Check you have all the documentary evidence your auditors will need

Although your auditors are looking to gather evidence with regard to your financials, they're aware that the figures can only be determined after the passing of time and won't be looking for evidence to prove the complete accuracy of these types of journals. That's why you must:
- Keep a record of all journal documents, numbering and narrations;
- Document all calculations;
- Keep original documents; and
- Limit authorisations.
3. Check the journals you need to do estimations for
- Allowance for doubtful debt;
- Useful lives of assets;
- Residual value of assets;
- Provisions; and
- Warranties.
If you can prepare all of these things before your auditors, you'll be able to reduce the amount of time he has to spend going through your finances by half.
This, in turn, could mean cutting your audit bill in half. 
If you want to find out more information about preparing for your end of year audit, check out the Practical Accountancy loose Leaf Service.

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