There are numerous businesses and organizations have never gone through an audit. Also, the companies who are about to go public through an initial public offering (IPO’s) must get their audit done. In such circumstances, auditors or audit service firms need plenty of information. Therefore, it is better to get ready and prepared previously with all the essential data and information instead of running from pillar to post later. For your help, we have listed some key things which you might need if you are getting your company’s first initial audit done.
Most of the business or organizations use QuickBooks, which are software solutions and mainly designed to manage inventory, payroll, sales and other needs of a company. You can without much of hassle export your general ledger to Excel or can send a backup copy of your QuickBooks to the auditor or an Audit Firm in Pune. It is going to provide your auditor a crystal clear indication of the amount of activity they need to audit.
A trial balance is refers as “A statement of all debits and credits in a double-entry account book at the end of the accounting period, with any disagreement indicating an error. This is a key document for your auditor and this will come from your accounting software or QuickBook as well. Your total debit balance must be equal to the total credit balance. Trial Balance is maintained to make sure that there are no unbalanced entries left in the system of accounting. Remember, all of the numbers in your financial statements or financial report are traced back to the trial balance. Many auditors prefer to get it in Excel because they can copy it directly into the trial balance part of their electronic workpaper software.
Businesses that have never financial statements prepared as per generally accepted accounting principles (GAAP), but have filed tax returns, then their depreciation schedules are probably on a tax basis only. There are several tax methods are acceptable under GAAP, and a common tax method for equipment is 7 years and 200% double declining balance and it is often reasonable for GAAP. But, you are not permitted to take Section 179 reward depreciation and other basis reductions sometimes permitted under the tax rules in a GAAP statement. If the depreciation schedules are in a decent fixed asset software program, then it is usually easy to compute GAAP depreciation.
Copies Of Loans And Leases
Book-keeping standards need disclosure of all loans and leases. The audit agency or your auditor needs copies to ensure your disclosures are accurate and complete. For instance, accounting standards need disclosure by the year of your minimum needed lease payments for the next 5 years and the minimum expected sublease payments, assuming any. Apart from this, lease expense for all years must be disclosed, because the lease is an important piece for testing that sum. Apart from copies of loan and leases, you also must disclose all contracts of land materials. Keep in mind that material contracts can cover long-term agreements with suppliers or customer, buying and selling agreements as well as employment contracts.
A lot of new businesses do not have payroll and many of them even don’t even have employees and workers. But if you do, then the auditors will want to see them for the testing of salary / wage expense. Besides, it will help the auditor test for any unrecorded payroll tax liabilities as well.
Stock Subscription And Option Agreements
Several new businesses or organizations have agreements in place to issue stock to investors, employees and existing stockholders. Many businesses often have option agreements in all places. The auditor will need to examine these vital documents to test for completeness of disclosures as well as to test the determination of stock option disbursement.
By-Laws And Incorporation Articles
Bylaws, also known as Corporate Bylaws, is a document used by a company and organizations to organize its internal management simply by setting out the rules and responsibilities of directors, shareholders, and officers. On the other hand, Incorporation articles are a set of formal documents filed with a government body to legally document the formation of a company. So, you must disclose the number of issues or outstanding or even authorized shares. Also, a part of this portion of this statistics is there in your incorporation articles. Besides, By-laws have some data which has to be disclosed as well.
A Complete List Of All Bank Accounts With Bank Names And Account Number
The auditor or the audit company needs to verify the bank balance with the balance sheet on different dates. Therefore, you should provide brief and accurate information regarding your bank details like all account numbers, bank names along with the authorized signatories. Also, authorized signatories mean an individual who has the legal power to sign an official document on your behalf.
Going to make your company public, means you might have a debt on the company. So, you must provide this vital information to the auditors or service company so that they can confirm your debts with your creditors. Apart from this, you can also provide a current statement of your loan to them to ease the process of confirmation or verification.