Just hearing the words “ financial audit” is enough to make most business owners break into a sweat. But, much like a dental checkup, while you might not look forward to it, it’s necessary to ensure everything is in working order. The good news? With the right preparation, you won’t lose any sleep over it.
In this month’s blog, we will spell out how to prepare for a financial audit, especially if you’re involved in large-scale projects like construction. Plus, we’ll show you how Moose Creek Bookkeeping can be the secret weapon in your audit toolbox. Since we have been guiding businesses of all sizes through daunting audits, we know what the auditors are looking for, and how to keep them happy.
Why Preparing for a Financial Audit Matters
First, an audit isn’t about proving that you’re perfect. No business is! It’s about confirming that your financial statements are accurate, your records are compliant with regulations, and there’s no funny business behind the scenes.
Audits are particularly important for businesses involved in large projects like construction because the scale of your financials tends to be… well, massive. Between the materials, contractors, change orders, and payments that stretch out over months or even years, there’s a lot for auditors to dig through. Without preparation, it can quickly turn into an unorganized nightmare.
That’s where preparing properly – and partnering with Moose Creek Bookkeeping – comes in.
Step 1: Get Your Financial Records in Order (Yes, All of Them)
Gather every relevant document and have them neatly organized and ready to hand over to your auditor. The basics include:
- Financial statements (income, cash flow, and balance sheets)
- Tax returns
- Accounts payable and receivable
- Bank statements
- Payroll Records
- Contracts
- Vendor agreements, invoices, and purchase orders, etc.
To prepare for a financial audit, construction businesses must keep detailed records of project-specific financials like progress payments, retention, and change orders. Your auditor will be looking to see that the numbers match up between your contracts and what’s actually hitting your bank account.
Step 2: Conduct a Pre-Audit Checkup
Here’s a pro tip: don’t wait for the auditor to find mistakes. By doing a pre-audit assessment, you can identify and fix issues before the real audit begins. It’s a chance to double-check your numbers, look for inconsistencies, and clean up any messes before they become red flags. Being prepared for an Audit at any moment is every business’ end goal and we can help get you there before the auditors even have you on their radar.
For construction projects, pay special attention to your job costing, vendor payments, and project budgets. These are areas that often trip up businesses, and the larger your project, the bigger the potential for mistakes.
Step3: Stay on Top of Compliance
One of the main goals of an audit is to ensure that your business complies with industry standards and regulations. For construction businesses, this can include specific tax rules, labor laws, or contract guidelines.
It’s important to understand what your business needs to comply with, especially since non-compliance can lead to fines, penalties, or worse. Our team is well-versed in regulatory expectations, and we’ll ensure your business meets all tax compliance and labor regulations before your audit begins.
Step 4: Get Your Team Onboard
A financial audit isn’t just a “bookkeeping” problem—it’s a company-wide event. That means your team, particularly those involved in financial decisions or project management, needs to be prepared. Make sure they know what to expect and that they’re available to provide any additional information the auditor might request.
For large-scale construction projects, this might include multiple teams or departments, so clear communication is key. From answering questions about payroll to clarifying budget decisions, we act as the go-between, so everyone’s on the same page when the audit begins.
Step 5: Use Automation to Your Advantage
If you’re still tracking invoices, expenses, and payroll manually, it’s time for an upgrade. Automation can streamline your processes, minimize errors, and keep your records more organized. Plus, auditors love a well-documented system that’s easy to follow. As in previous blogs, we have covered our favorite online bookkeeping and CRM platforms: Quickbooks Online and JobTread. Both of these platforms make automation a breeze!
If you are considering going digital or switching platforms, we can help you implement automated bookkeeping systems that handle the heavy lifting. From expense tracking to payroll processing, our tools keep your records up-to-date and audit-ready 24/7.
Another way to prepare for a financial audit is to start thinking like an auditor. Auditors like to see strong internal controls, like requiring multiple approvals for large expenses or conducting regular internal reviews, showing that you’re serious about keeping your finances in order. Auditors are very happy when they see that you are taking proactive measures to manage your financials.
How Moose Creek Bookkeeping Can Help You Prepare for a Financial Audit
Whether you’re a construction company tackling multi-million-dollar projects or simply looking for peace of mind, our team will guide you without judgment. Think of us as your financial pit crew. We don’t just balance the books – we take a deep dive into your processes to see what’s working and what could use a tune-up. Whether it’s improving your expense tracking or tightening your project-based accounting for construction, we’ve got you covered. We encourage all our clients to become “audit ready” so when and if the time comes, you’ll be prepared.
Moose Creek Bookkeeping is here to help you make the process as smooth as possible. Please give us a call or schedule a free discovery call here.
