What your auditoractually needs from you

Every audit that runs late runs late for the same handful of reasons, and none of them is the audit itself. This is the list we send our own clients in November, so that February is uneventful.

Do these before the year ends

Three things cannot be fixed afterwards. If they are not done on time, no amount of goodwill in February recovers them.

1. Count your inventory on the balance sheet date

Not the week before, not the week after. If you hold stock, the count has to happen at the year end, and someone independent should attend it. A count done on 6 January for a 31 December year end is not evidence of what you held on 31 December, and reconstructing it backwards from movements is slow, expensive and rarely conclusive.

Tell us your count date in advance and we will attend. It takes a morning and it removes the single most common reason an audit opinion gets qualified.

2. Request your bank confirmations in December

Banks in Lebanon take weeks to return audit confirmation letters, and they take longer in January than at any other time because every audited company in the country is asking at once. Requests sent in December come back in January. Requests sent in February come back in April, and your audit sits waiting.

You need one for every account, including the ones with nothing in them and the ones you stopped using — a dormant account you have forgotten about is still an account we have to confirm.

3. Agree your related-party balances

If you trade with a company you also own, or lend between entities, the two sets of books have to agree. They very often do not, usually by a small amount and usually because of timing. Finding a difference in December means a conversation. Finding it in March means an adjustment, and possibly a restatement.

Have these ready for the first week

• Trial balance and general ledger for the full year, exported from your accounting system rather than retyped.
• Bank statements for every account, every month, plus the reconciliations.
• Fixed asset register with additions and disposals for the year, and the invoices behind them.
• Aged receivables and payables at the year end, with your view on anything you do not expect to collect or pay.
• Loan agreements and statements, including anything from shareholders or related companies, however informal.
• Payroll records and NSSF filings for the year, including end-of-service calculations.
• VAT returns for all four quarters, and the workings behind them.
• Board and shareholder minutes for anything with a financial effect — dividends, capital changes, guarantees, significant contracts.
• Contracts signed during the year that commit you beyond it: leases, supply agreements, anything with a termination penalty.

The two we always end up chasing

Minutes. Almost nobody keeps them properly, and almost every audit needs them. If a decision was made about money, there should be a record of who made it and when. A page in a folder is enough. Nothing is not.

Invoices for capitalised items. An addition to fixed assets needs the invoice behind it, and by February the person who bought the equipment has often left, or the supplier has changed their system. Collect them as you go.

What this buys you

An audit where all of the above is ready takes a fraction of the time of one where it is not — and the difference is not our convenience, it is your cost and your filing date. The corporate income tax deadline is 31 May for an SAL or SARL, and it does not move because the audit is late.

If you are a client, your adviser will send you this in November with your own gaps marked. If you are not, you are welcome to use it anyway.