Audits are an unavoidable aspect of business, but for many, the process can be a source of considerable stress. While the demands and scrutiny of an audit can feel overwhelming, finance leaders can mitigate these pressures with careful preparation and a strategic approach. Understanding what an audit entails and how to manage it effectively is key to ensuring the process runs smoothly, offering opportunities to strengthen financial practices.
Audits: A Source of Anxiety for Many Finance Leaders
The audit process is time-intensive and often fraught with complications. Finance teams are tasked with gathering vast amounts of information, often under tight deadlines, which can result in disruptions to normal business operations. Sarah Spoja, CFO of Tipalti, a payment software group, explains the stressful nature of audits: “It can feel like you’re under a microscope, with unclear requests and missing documents that take days or weeks to address—all while trying to keep business operations intact.”
A poorly managed audit can lead to significant consequences, such as negative audit opinions, loss of investor confidence, or financial penalties. For CFOs, leading the audit process efficiently is not only crucial to maintaining operational stability but also ensures compliance, mitigates rising audit costs, and provides peace of mind that financial records are accurate.
Audit Burnout: The Mental Toll on CFOs
According to research from audit firm Inflo, a significant majority (77%) of finance leaders in the UK report anxiety related to audits. More than half (59%) of respondents feel stressed or burnt out by the process, and a troubling 17% cite it as a factor driving them out of their roles. A major challenge for businesses is the sheer volume of information that must be gathered, which demands considerable time and resources. Additionally, a lack of visibility and communication throughout the audit process often leads to delays and confusion.
Mark Edmonson, founder of Inflo, emphasizes the frustration many businesses experience: “Despite the substantial effort put into the audit process, firms often receive little more than a signed audit opinion with no strategic insights.” To alleviate this, he suggests rethinking the role of auditors and treating them as partners, not adversaries.
Managing Complexity in Growing Businesses
As businesses expand, audits become increasingly complex, with processes stretching from weeks to several months, depending on the company’s size and the intricacy of its financial records. Spoja notes that CFOs are expected to manage an ever-growing list of audit requirements, including new areas like ESG, cybersecurity, insurance, and risk. With limited resources, keeping up with these demands can stretch finance teams thin, and over half (57%) of finance leaders say audits detract from core tasks, reducing overall business productivity.
Early Preparation: Key to Reducing Audit Burdens
Pete Fendall, Chief Finance and Operating Officer at Dow Schofield Watts, advises that the best way to ease audit stress is through early and thorough preparation. Firms should start assembling key documents—such as contracts, agreements, and share awards—well in advance of the audit. Fendall recommends ensuring that every transaction is properly documented, with key judgments cross-referenced against accounting standards, to streamline the process and avoid complications down the line.
A clear audit timetable, with defined deadlines and designated responsibilities, is essential for keeping everyone on track. Fendall also highlights the importance of involving all relevant stakeholders, from finance teams to board members and even external parties like marketing and PR teams.
Running a ‘Dry Run’ and Ensuring Internal Controls
Darren Mercieca, Managing Director at MRC Audit, stresses the value of conducting a dry run before the official audit begins. This trial run can help identify potential issues early, allowing firms to address discrepancies before the auditors arrive. “It’s about ensuring your financial statements are ready and catching problems before they arise,” Mercieca explains.
Additionally, internal controls must be rigorously maintained. Weak or outdated systems can lead to significant issues during the audit, which could delay the process or result in penalties. CFOs must also stay informed about changes in regulations and accounting standards well ahead of the year-end audit.
The Importance of Strong Relationships with Auditors
Spoja highlights the importance of viewing auditors as collaborators rather than external scrutinizers. “Auditors are there to work with you, not against you,” she says, emphasizing the importance of clear communication and realistic expectations throughout the audit process. In large or geographically dispersed businesses, maintaining alignment across multiple teams and auditors can be challenging. Establishing a central point of contact and scheduling regular meetings to monitor progress helps keep everyone on the same page and prevents miscommunication.
Frequent communication throughout the process not only makes the audit smoother but also provides an opportunity to address concerns as they arise, rather than waiting until the final stages of the process.
Reflecting and Improving After the Audit
Once the audit is completed, Fendall recommends conducting a debrief to review the process. “Engaging auditors in this review can offer valuable insights that improve future audits,” he says. While audits are often stressful and may uncover discrepancies or missing documents, they should not be viewed as a purely administrative task. When managed well, audits offer an opportunity to refine internal processes and benchmark the business against industry standards.
Ultimately, the audit process, while daunting, can be a valuable tool for business improvement. By approaching it strategically, with careful planning and strong communication, CFOs can reduce the burden on their teams, ensure compliance, and leverage the audit as a stepping stone to better financial management.
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