Audit and review readiness — working papers built as the year goes
Updated
An audit costs what it was quoted when the file arrives ready and considerably more when it does not. Almost all of that difference is decided in the months before the auditor starts, not during the fieldwork.
EverStone CPA is a sole practitioner Chartered Professional Accountant firm working remotely with owner-managed businesses across BC.
Quick answer: Audit and review readiness means the balance sheet is reconciled with supporting schedules, the accounting policies are written down and applied consistently, the estimates and judgements have a documented basis, and the working papers exist before the auditor asks. It is a defined piece of work with a deadline, and it is usually what turns a painful engagement into a routine one.
The notice to reader is the old name for what is now a compilation engagement under CSRS 4200; readiness for one is the same exercise as readiness for a review.
On this page
Why a business ends up in an audit or a review
Most owner-managed businesses are never audited. Those that are usually have a reason: a lender or bonding company requires it above a facility size, a shareholders’ agreement calls for it, a grant or public-sector contract demands it, statute or members require it for a not-for-profit, or a buyer in a sale wants assurance.
A review engagement is the lighter, far more common form: less work than an audit, negative rather than positive assurance, and a fee to match. Which level you actually need works through the decision. Make it deliberately, because it cannot be upgraded afterwards without a separate engagement.
What readiness actually means
- Every balance sheet account reconciled, with the support attached. Not just the bank. Prepaids, accruals, deferred revenue, intercompany, loans, and the equity accounts that nobody has looked at since incorporation.
- Accounting policies written down. Revenue recognition, inventory valuation, capitalization thresholds, the basis for estimates. Applied consistently, and consistently with last year.
- Estimates with a documented basis. The allowance for doubtful accounts, the percentage of completion on contracts, the useful lives. An auditor is not testing whether your estimate is right; they are testing whether it was arrived at properly.
- Related party transactions identified. Shareholder loans, management fees, rent to a company you also own, personal expenses run through the business. These get found, and finding them yourself is much cheaper.
- Fixed asset continuity. Additions, disposals, the CCA schedule tied to the ledger, and the supporting invoices where they can be located.
- A prepared-by-client list, delivered before the fieldwork starts. The single largest driver of an audit running to time.
Why readiness decides the fee
An external firm quotes on an expected number of hours. Every request that has to be chased, every schedule that has to be built during the fieldwork, and every unexplained balance adds hours to that estimate, and the fee follows.
It also compounds. The first audit is almost always the most expensive, because opening balances and policies are established for the first time. A business moving into work that needs audited statements should establish the requirement a year early.
The other cost is your own time. An unprepared audit is answered by the owner and the bookkeeper in real time, during the working day, for several weeks. That cost never appears on an invoice.
What we do, and what we do not
We prepare you for the engagement. The reconciliations, the schedules, the policy documentation, the prepared-by-client list, and the point of contact during the fieldwork so the questions do not land on you. We do not perform the audit. An audit or review engagement on a file we prepare would be a self-review, and independence rules exist for good reason. The assurance engagement is performed by a separate firm, and we work alongside them. Where a compilation is what you actually need, that is different again, and it is work we do. Year-end statements sets out the levels.Where this fits
Audit and review readiness is a deliverable inside a fractional controller engagement: the one with the hardest deadline, and where doing it through the year rather than in spring shows most in the fee.
Other fractional cfo or controller work
The rest of what this covers, and the page each one is on.
Common questions about audit readiness
When should we start preparing?+
Can you be our auditor as well?+
Do we need an audit or a review?+
We have never been audited and the books are messy. Is that a problem?+
Starting fees
Every fee is fixed in writing before any work begins.
- Controller or CFO supportcontroller from $1,650, CFO from $2,750 a monthThis page
- Monthly bookkeeping, GST/PST filing includedfrom $325 a month
- Payroll, remittances, T4s and ROEsincluded in monthly bookkeeping
- Books, payroll and the year-end T2 together$500–$700 a month
- Corporate year-end and T2 returnfixed fee, quoted in writing
- Personal tax return (T1)from $125; self-employed or rental $275–$500
- Catch-up bookkeepingfrom $2,200 per year of records
- One-off advice call with a CPA$225 plus GST