Preparing your team for an external audit can feel overwhelming, especially if this is your first time going through this process. Every external audit is different, depending on the industry you work in and the scope and the standard against which you will be audited.

However, preparation and understanding of what to expect can make your audit experience go smoothly and provide you with the information you need to better understand your business and/or satisfy your certification needs for your company.

Here’s a brief explanation of what the external audit will entail, and how you can be best prepared so you get the most valuable information from your audit.

What is an external audit?

Whether you’re looking to get or retain a needed certification, to be in compliance with industry or legal standards, or you just want a more efficiently run company, an external audit is an important process for you and your business.

The audit will reveal an objective evaluation of your organization’s financial statements and reporting methods. External audits advise on areas of inefficiency within your business or areas that may be overperforming. They also determine whether your organization complies with or adheres to certain requirements and standards, including legal, regulatory, environmental, or health & safety-related requirements.

What’s the purpose of an external audit?

The primary purpose of an external audit is to display compliance where certification is needed and to serve as a quality management tool ensuring that your company meets or exceeds standards, requirements, and conditions specific to your industry.

If your business measures up, then it is issued a certificate which your company can use to both demonstrate compliance and bolster your reputation as a trustworthy business.

What does an external audit entail?

Depending on the purpose or certification standard in question, external audits can be conducted in several ways. However, the standard procedure includes:

Appointing an auditor

Hiring a reputable, qualified, and independent auditor is crucial for getting the most from your external audit.

Reviewing and accepting the terms of the audit

The auditor will then confirm the acceptance of the appointment, present the terms of the audit, and detail the standard the audit will be measured against.

Collect, assess, and interpret data for the audit

The auditor will gather and assess data to gain an understanding of the organization’s activities

Gather relevant evidence

This may include confirming compliance, examining accounting records, and verifying assets.

Present the report

This is where the auditor submits a financial report and states their objective opinion.

How to be prepared for an external audit

The aforementioned process may seem intimidating, but there are several ways you can be prepared before the audit that will help the audit go more smoothly and calm whatever apprehension you may feel about the auditing process.

Ask questions

Your external audit can be a game-changing experience for your business going forward, aside from the certifications you may need. Understanding where your business can operate more efficiently or where your business is thriving in ways you may not have noticed can make a huge difference for your growth going forward. Asking questions during your audit is key to understanding the process better, and you’ll often uncover a wealth of information.

Understand the standard

Your audit is a compliance report based on an external standard, so it’s important to take the time to understand the standard you’re being measured against.

Identify your Subject Matter Experts (SMEs)

Your reliance on the employees who are directly involved in the external audit is critical to maximizing the success and efficiency of the external audit. These team members know the areas of your business where you will be audited best, so you’ll need to explain the importance of this upcoming audit and present them with the standard against which you will be compared.

Prepare

Everyone needs to be on the same page, so meetings and communication with your team are critically important. Plan to discuss purpose, structure, and expectations with your staff before the audit.

Gather relevant documents and information

Decide what information you need to complete the audit and be sure to have it readily available for your auditor. These documents, whether digital or physical, include policy documents, financial statements, and process artifacts. A good way to stay organized and to get the most relevant documents for this process is to make a list of documents that demonstrate the current internal control structure and review them.

An Auditing Firm Passionate About Your Success

An external audit may seem like a massive undertaking for you and your staff, but our experienced staff here at the Baird Audit Group is ready to make the process as seamless as possible. Our goal is to provide you with the certifications you need and the increased knowledge of your business that allows you to grow and progress successfully as a company.

At The Baird Audit Group, we’re ready to partner with you to ensure your business is operating as efficiently as possible. Our team offers a full range of financial reporting. Whether you need an audit, internal or operational audit, audit reviews, compilations, AUPs, forensic or fraud examination, litigation support, or even consulting for internal personnel or procedural manuals, The Baird Audit Group will take care of you and your organization.

Located in Augusta, Georgia, we are ready to help you with your financial audit today. Contact us online or by calling 706.855.9500 to find out how we can help your small business thrive.