When business owners begin planning for growth, new investors, financing or an eventual sale, tax planning is usually one of the first conversations they have. That may be the right instinct, but it’s only part of the picture. Planning only from a tax perspective is a bit like going to the dentist and completing only half of the cleaning. It addresses one important area while overlooking another that can become just as critical when opportunities arise.
Depending on the transaction or financing arrangement, buyers, investors and lenders may require audited financial statements. If an organization has never completed an audit before, preparing for one on short notice can create unnecessary stress, additional costs and delays. The good news is that becoming audit ready doesn’t happen all at once. Like most business improvements, it’s something that’s built over time.
Sometimes closely held private companies, particularly in the energy and oilfield services sectors, find themselves needing an audit on short notice after receiving an incredible purchase offer or securing a new line of credit. When no groundwork has been laid in advance, the audit process can create additional pressure, costs and delays at a critical moment.
Rather than jumping directly into a financial statement audit before it’s necessary, organizations can strengthen their financial reporting processes through a series of assurance services that help prepare them for future audits and transactions.
In the years leading up to a first-time audit, assurance professionals can help improve internal controls, evaluate segregation of duties, make recommendations for month-end and year-end close processes and identify opportunities to improve financial reporting. These foundational improvements can help make future audits more efficient while helping management gain greater confidence in its financial information.
