Audit and review readiness — working papers built as the year goes
Reviewed by EverStone CPA · September 2026
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 in Abbotsford, British Columbia, working remotely with owner-managed businesses across Canada.
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.
Why a business ends up in an audit or a review
Most owner-managed businesses are never audited. The ones that are usually got there for one of a handful of reasons: a lender or bonding company requires it above a certain facility size, a shareholders’ agreement calls for it, a grant or a public-sector contract demands it, a not-for-profit is required to by statute or by its members, or a sale process is underway and the buyer wants assurance.
A review engagement is the lighter form and is far more common: less work than an audit, a negative rather than positive assurance conclusion, and a fee to match. Which level you actually need works through the decision, and it is worth having deliberately rather than by default, because it cannot be upgraded after the fact 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, capitalisation 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 of a file is almost always the most expensive one, because the opening balances have to be established and the policies documented for the first time. A business intending to move into work that requires audited statements is much better off establishing the requirement a year before it needs it.
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 one of the deliverables inside a fractional controller engagement. It is the one with the hardest deadline, and the one where the difference between doing it through the year and doing it in the spring is most visible in the fee.
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?+
Talk to a CPA about this
One Chartered Professional Accountant, start to finish. Fixed fees, quoted in writing before any work begins, and no obligation from a first conversation.
“Sunny and his team have been completing my bookkeeping, taxes and financials for the last 2 years and they have been amazing. Thank you!”