Common Audit Queries and How to Avoid Them
The pattern
Audit queries often feel random to the business receiving them. In practice, auditors tend to raise questions in the same few areas, because those are where records are most likely to be incomplete or unclear.
The cost
Each query is a request for time, documents and explanation. A long list of them extends the audit, takes the owner's attention from running the business, and can raise the cost of the engagement.
Unexplained or unusual transactions
Large, round-figure or one-off entries draw attention because the reason is not obvious from the books. A short note recorded at the time, saying what the transaction was and why it happened, removes most of these questions before they are asked.
Missing supporting documents
An entry without an invoice, agreement or proof of payment is a standing query. Keeping documents together with the entries they support is the simplest way to avoid this whole category.
Balances that do not reconcile
Bank balances, party balances and ledger totals that do not agree with their supporting statements prompt immediate questions. Reconciling these regularly, not just before the audit, keeps small differences from growing.
Inconsistent treatment from year to year
If something has been recorded one way in the past and another way this year, expect to be asked why. Where a change is deliberate, document the reason so it can be explained quickly.
Loose ends from earlier periods
Old unresolved balances, unexplained opening figures and open observations from a previous audit are familiar sources of queries. Closing them out during the year prevents them being carried forward.
The reframe
An audit query is rarely a sign of a problem. It usually signals that something cannot be understood from the records alone. The more your records explain themselves, the fewer questions there are to answer.
Next step
Look through the points of your last audit that took the longest to resolve. Those are the areas where better records or a short explanatory note would save the most time next time.
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Audit & Assurance→This article is for general informational purposes and does not constitute professional tax, legal or financial advice. Please consult with us directly regarding your specific circumstances.