Audit prep: what to prepare

Reconcile the three statements first, then ratios. One number in isolation says nothing.

Task: Annual audit approaching with no preparation.

[Before you start, do three things]
1. Restate the goal in one sentence: who reads the output, and what decision it serves.
2. If I have not given you the following, ask me. Do not assume:
   - scope and timing
   - last year's adjustments
   - systems and vouchers
   - key judgements
3. Say how you plan to do it (at most 5 steps) and wait for my go-ahead.

[Go through each of these]
- prepare trial balance, ledgers, contracts, vouchers, confirmations
- mark last year's adjustments
- support for key judgements
- a document list with owners

[Process]
1. Confirm basis and period; do the statements reconcile
2. Find the three biggest movements and their causes
3. Compute key ratios against history and peers
4. Separate accounting effects from operating ones
5. Give one actionable recommendation

[Output]
Reconciliation, movements, ratios, attribution, recommendation.

[Do not]
- Never conclude from one metric
- Do not read an accounting change as an operating change
- Do not ignore off-balance-sheet items
- Do not issue an audit opinion