Nine documents to prepare before the first meeting

The first meeting is usually spent looking for files. The list below is what we ask for on every engagement. Prepared in advance, it saves us both a week of emails.

1. The trial balance at the reporting date, with opening and closing balances. Everything else starts from this.
2. Draft financial statements, even if not final. We want to see how you grouped the line items, not the final figures.
3. The journal and the general ledger, in electronic form. We use them to select what to test, not to read end to end.
4. The fixed asset register, with additions, disposals and depreciation for each item.
5. Signed inventory count sheets, with the differences found and how they were resolved.
6. Bank statements at the reporting date and the confirmation requests sent to the banks.
7. Material contracts in force: loans, leases, rentals, agreements with major customers.
8. The litigation schedule, from the company lawyer, with the status of each case and an estimate of the risk.
9. The list of related parties and transactions with them for the audited year.

What we do with them

We do not read all of it. From the trial balance and the ledger we choose what to test, based on risk and value. The rest of the documents either support or contradict what we see there.

The last two on the list are the most often forgotten and the ones that produce the most late questions. Litigation may require a provision you have not recognised. Related-party transactions may require a transfer pricing file, which takes weeks, not days.

If something is missing

Tell us at the start. Incomplete records do not stop an audit, but they change how we work and sometimes the opinion in the report. Known in time, it can be dealt with. Known in the final week, it cannot.