The first audit is a project, not an event
Most companies reach their first financial statement audit the same way. A lender, investor, board, or acquirer asks for audited financials. Suddenly a deadline appears. The finance team, often one or two people, must produce a year of clean records while also closing the current month.
It goes better when you treat the audit as a project that starts months before fieldwork, not a scramble that starts when the auditors show up. Here is the checklist we’d give any first-timer.
1. Understand what the auditor is actually testing
An audit is an independent opinion on whether your financial statements are fairly presented. For most private US companies, the framework is US GAAP, as codified by FASB. The auditor gathers evidence for a few basic claims: recorded transactions happened, balances are complete and accurate, you own your assets, values are right, and disclosures are clear. Everything they ask for maps back to one of those claims.
2. Get the trial balance and close process solid
Auditors start from your year-end trial balance. If your monthly close is slow, informal, or reopened constantly, that shows up immediately. Before fieldwork:
- Close each month on a defined timeline and stop reopening prior periods.
- Reconcile every balance sheet account — cash, AR, AP, accruals, fixed assets, debt, equity — and keep the reconciliation with supporting detail.
- Document any significant estimates (allowances, reserves, useful lives) and the logic behind them.
3. Build the PBC list before they send you one
Auditors work from a “prepared by client” (PBC) list. It names the documents they need from you. You do not have to wait for it. A typical PBC list includes bank statements, reconciliations, AR and AP aging, revenue contracts, the fixed-asset register, debt and lease agreements, payroll reports, board minutes, and general ledger detail. Assemble a shared, well-labeled folder now.
4. Nail revenue and cut-off
Revenue is where first audits most often stumble. Under ASC 606, revenue is recognized as you satisfy performance obligations. It is not simply when you invoice or get paid. Write down your revenue policy, apply it the same way across deals, and keep cut-off clean. December revenue should really belong to December.
5. Expect testing of journal entries and estimates
Auditing standards (AICPA AU-C section 240) require auditors to test journal entries for signs of error or manipulation. Manual, unusual, and period-end entries get special attention. If you can show who posted each entry, who approved it, and why, that part of the audit gets much shorter.
The payoff of readiness
Preparation is not busywork. It directly lowers your fee. Private-company audits often run from about $7,000 for the smallest companies to $15,000–$35,000 for mid-market businesses. Messy records and weak controls are major cost drivers because auditors bill the hours they spend cleaning up before they can test. Walking in ready is the most reliable way to pay less and finish faster.
Ressura keeps your reconciliations, controls, and evidence trail current all year, so the PBC list is mostly a matter of exporting what you already have.