Why preparing matters now
Audits—whether a statutory financial audit, a SARS tax inspection or a due-diligence review by a buyer—are stressful when you leave everything to the last minute. South African businesses that prepare early reduce costs, cut the auditor's query list and lower the risk of penalties. The six practical steps below focus on what auditors actually test: documentation, reconciliations, control evidence and communication.
Step 1: Confirm the scope, deadlines and requirements
Start by agreeing the audit type and timeframe with the auditor or tax advisor. Is it a statutory audit under the Companies Act, a SARS VAT/PAYE inspection, or an investor-led due diligence? Different audits need different evidence—financial statements and fixed-asset registers for a financial audit; VAT invoices and eFiling history for a SARS review.
Practical tip
- Ask the auditor for a preliminary checklist and the preferred formats (PDF, Excel, or accounting system exports).
- Confirm the engagement partner is registered with the Independent Regulatory Board for Auditors (IRBA) if this is a statutory audit.
Step 2: Compile core accounting files
Gather the basic file set: trial balance, general ledger, bank statements, VAT returns, PAYE/EMP201 records, creditor statements, debtor age analysis and a fixed-asset register. Make sure electronic records are backed up and labelled clearly.
Practical tip
- If you use cloud accounting (Xero, QuickBooks, Sage), export the trial balance and bank reconciliation reports for the audit period.
- For manual systems, scan original receipts and group them by month and by supplier.
Step 3: Reconcile and resolve major balances
Audit time is when discrepancies get investigated. Clear as many reconciling items as possible beforehand: bank reconciliations, creditor and debtor reconciliations, payroll reconciliations and VAT control accounts.
Practical tip
- Run an aged debtors report and chase old balances. Obtain written confirmation where legal disputes exist.
- Match supplier statements to your ledger and query any unexplained credit notes or unrecorded invoices.
Step 4: Do a physical and systems check
Auditors will verify physical existence and valuation for inventory and fixed assets. Conduct a stock count and update your fixed-asset register before fieldwork starts. Ensure assets are tagged and purchase invoices are available.
Practical tip
- Schedule a stock take outside peak trading hours. Have two staff involved (counter and verifier) and record variances.
- Reconcile the asset register to depreciation schedules and invoices for significant items.
Step 5: Strengthen controls and prepare supporting evidence
Auditors sample controls and transactions. Produce evidence of approvals, board minutes for significant decisions, lease agreements, major contracts, and proof of tax payments. For payroll audits, provide PAYE summaries and UIF/COIDA contributions.
Practical tip
- Provide a short narrative for unusual transactions—large one-off sales, foreign currency movements or related-party transactions—to reduce back-and-forth queries.
- Document who has approval authority for payments to show segregation of duties.
Step 6: Assign responsibilities and run a dry run
Nominate a small internal team as the audit point of contact. Assign each person a document pack to prepare and a timeline. Run a one-week dry run where the auditor’s typical questions are answered internally to identify gaps before the real audit.
Practical tip
- Keep a single shared folder (secure cloud or encrypted drive) organised by audit area: Bank, Sales, Purchases, Payroll, Fixed assets, Tax.
- Keep a log of auditor queries and your responses—this creates an audit trail and speeds up rework.
Final checklist and common pitfalls
Complete these before the first field visit: bank reconciliations up to month-end, copies of supplier confirmations, VAT and PAYE proofs, board minutes, asset invoices, and a current trial balance. Common pitfalls are missing supporting invoices, unreconciled suspense accounts and inadequate explanations for related-party transactions.
Prepared records, a clear point of contact and realistic timelines cut audit fees and time on site. If unsure about legal requirements or SARS exposure, consult your auditor or tax advisor early—preparation pays off.