Ah, year-end audit time. The season where finance teams bunker down, reject all social invites, and ask themselves “what did I do to deserve this!?”. During the long inward reflection sessions most accountants will make themselves a solemn promise, "Next year, I’ll do more work ahead of time."
...but, inevitably, when that rolls around it’s the same story: what should have been spread over 12 months is being jammed into a matter of weeks. Cleaning up reconciliations, correcting the support for manual journals, finally investigating what sits in the ‘Other Expenses’ account and understanding why it seems to be increasing faster than your coffee intake. Sound familiar?
If you find yourself in this yearly audit crunch cycle, there’s good news: it can be fixed. A smooth year-end starts with a well-run month-end close process. And if you can get your monthly processes humming like a hive of highly organized bees, the end-of-year audit won’t feel like a marathon. It’ll just be... another month, but with annoying auditors (unfortunately we can’t get rid of them).
Let’s break it down.
What Do We Mean by a "Good Audit"?
First, let’s get one thing straight: when we say “good audit,” we’re not talking about becoming best buddies with the auditors. A good audit means getting through it without any major issues—clean, clear, and efficient. No dreaded minor “audit adjustments” that make you question everything you did over the past year.
The key? Perfecting your month-end close. If your year-end can feel like just another month-end close, you’ve won. When your finance team has consistent, repeatable processes that they’ve perfected throughout the year, the year-end audit will feel like just one more task on the to-do list rather than a full-blown project.
At the heart of this is one simple truth: what your team does every month is the foundation for what gets audited. The more solid that foundation, the less drama at year-end. Once your ledger is locked, the big stuff is done. The rest is just about disclosure notes and formatting. This may be a slight simplification, as any accountant who has had to deal with IFRS 9 will laugh at ‘just disclosures’, but the principle still applies.
Perfecting the Month-End Process: Where the Magic Happens
If your current plan is to scramble at year-end and tie up loose ends just before the auditors walk in the door, you’re in for some tough times. Squeezing 12 months’ worth of work into a few weeks? That’s an invitation to chaos, and there is nothing worse than a brand-new auditor that still confuses Debits and Credits finding a basic error that would not have happened with just one more minute of checking.
Instead, think of your month-end close as a dress rehearsal for year-end. Performing all the necessary tasks consistently each month means that when year-end rolls around, there’s no big rush. It’s just another month-end—only with a lot more caffeine intake.
Sure, there will always be a handful of tasks that can only be done at year-end, but the trick is to minimize these. Keep the year-end surprises to a minimum by building consistency into your month-end routine.
Here are some key areas to focus on:
- Month-End Close Management: Utilise a structured checklist and task management system to ensure all essential tasks are captured, allocated and completed on time.
- Team Management & Task Allocation: Clearly define roles and responsibilities within your finance team. Assign tasks early, and track progress throughout the month.
- Finance Task Management: Beyond month-end specific tasks, manage daily, ad-hoc, and project-based tasks effectively to maintain a clean and organised workflow.
Anticipate the Auditor’s Needs
Now, let’s talk about the audit. It’s a fact of life and rather than fight it (you will not win), you need to focus on making it as smooth (and therefore as quick) as possible. The audit team will dig through your processes and look for gaps, so look for the gaps yourself and slowly work on fixing them, one month end at a time. For example, you can guarantee that they will ask to see your reconciliations and manual journal entries. So each month spend 20 minutes slowing cleaning them up. Then come year end you will not be trying to investigate balances that are 11 months old and not reconciling.
Auditors are also creatures of habit, if they asked for something last year, they are more than likely going to ask for it again. So mark these down as areas that you know will be looked at, and then look at them yourself each month end as part of your monthly processes.
They will also want to see your month end close checklist to verify what is being done, by whom and when it is getting reviewed. Get into the habit of completing and signing off on all tasks throughout the year, and your checklist will be audit-ready before they even ask. This is where software can really help out, chat to us at Easy Month End about how we can help with your audit evidence.
Balance Sheet Reconciliations: More Than Just Compliance
Let’s call it like it is: too often, balance sheet reconciliations are treated like a “check-the-box” exercise. Often prepared long after month end is finished and forced to balance with a plug, or hardcoded number hidden in Excel. But they can be so much more than just a compliance item, your team should be using them to spot (and then correct) issues before the auditors even arrive on site.
If you perform balance sheet reconciliations correctly every month, you’ll be identifying and fixing potential audit red flags long before year-end. The audit process will always follow a simple path: GL balance to reconciliation list to supporting documentation. If you have this process clearly laid out in your month-end work papers, the year-end audit will not be so painful.
Think of it this way: balance sheet reconciliations are your audit prep. The better they are, the smoother the audit. If you’re finding and resolving discrepancies each month, then by the time the auditors come knocking, you’ll have nothing to worry about.
The Role of Month-End Close and Reconciliation Software
Of course, all of this is easier said than done—especially if your finance team is still relying on spreadsheets and manual processes. That’s where month-end close and reconciliation management software comes into play. A dedicated tool can help automate and streamline these tasks, ensuring consistency, accuracy, and audit readiness all year long.
Imagine having all your reconciliations, journal entries, and checklists organized in one place. No more last-minute hunting for supporting documents. No more missed tasks. Just a smooth, efficient process that runs like clockwork, making your month-end close—and your year-end audit—far less stressful.
Wrapping It All Up
At the end of the day, a smooth year-end audit starts months before the auditors show up. It starts with the processes you and your team perform every month. When you’ve got your month-end close down to a science, the year-end audit becomes just another task—no panic, no surprises, no stress.
So, if you want to avoid that last-minute scramble, it’s time to invest in perfecting your month-end close. And, hey, if you’re looking for a little help along the way, Easy Month End has you covered with the tools you need to streamline your processes and keep your team audit-ready, all year long.
Let’s make this year-end audit your easiest one yet!
Pete Archer
