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Statutory audit: how to prepare financial statements to avoid revisions

A statutory audit is an independent review of a company’s financial statements to ensure compliance with current legislation and financial reporting standards.
Companies subject to a mandatory audit must ensure that their reporting is accurate, complete, and of high quality in order to pass the audit without the need for corrections. This is achievable through a systematic approach to accounting, strict data control, and effective collaboration with the auditor.

Checklist: what to verify in advance

Audit preparation starts with a thorough internal review of the financial statements. Identifying errors and inconsistencies in advance allows for timely corrections and reduces the risk of additional auditor requirements.

Key areas to check in advance include:

  1. Account balances. All accounting accounts must be carefully reconciled with primary documents. Errors in balance recording may lead to serious audit remarks.
  2. Bank accounts and cash. Bank statements must match reported data. Cash balances must be supported by documents as of the reporting period end.
  3. Trial balance. Check the trial balance for discrepancies and negative balances, especially regarding taxes, payroll, and transactions with counterparties.
  4. Primary documentation. All transactions, revenues, and expenses must be supported by original documents: contracts, acts, invoices, and delivery notes.
  5. Inventory counts. Timely inventory checks and properly issued statements are essential to verify data on stock, fixed assets, and liabilities.
  6. Settlements with counterparties. All settlements must be backed by reconciliation acts, especially if significant receivables or payables exist.
  7. Payroll accruals. Verify the accuracy of salary accruals, tax deductions, and payments. Payroll calculation documents must be complete and accurate.
  8. Provisions and reserves. Ensure you have calculations and documentation to support created reserves (e.g., for doubtful debts, vacations, and other obligations).
  9. Explanatory note. This document must meet financial reporting standards and clearly disclose accounting methods, risks, and other important details.
We conduct audits in accordance with the legislation of the Republic of Moldova. Our services include verifying the accuracy of reports, analyzing financial indicators, and assessing internal control systems.
This helps companies confirm the transparency of their operations, avoid regulatory issues, and build trust with partners and investors.

Common mistakes that delay the audit process

Even experienced accountants can make mistakes that delay the audit. The most frequent issues include:

  • Misclassification of transactions. Operational and investment flows are often mixed, which leads to significant inconsistencies.
  • Lack of supporting documentation. Without documentation, transactions cannot be validated by the auditor.
  • Discrepancies between accounting and tax records. These require additional explanations and lead to more questions from the auditor.
  • Inactive or outdated assets. Assets that have been written off but not removed from records trigger extra checks.
  • Insufficient justification of reserves. Reserves created without detailed calculations and documentation may raise auditor concerns.
  • Weak explanatory notes. Incomplete disclosure of risks and accounting policies prolongs the audit process.

How to ensure efficient cooperation between accountants and auditors

A successful audit is the result of teamwork between internal accountants and external auditors. To ensure a smooth process without conflicts, it’s important to:

  • Appoint responsible persons for document preparation and communication with auditors.
  • Develop a calendar plan with clear deadlines for preparing and submitting all required documents.
  • Conduct an internal audit to identify and resolve potential issues before the auditor’s visit.
  • Prepare explanations in advance, especially for complex or unusual transactions, revaluations, reserves, and debts.
  • Grant auditors view-only access to accounting systems to facilitate data verification.

Stages of a statutory audit

The statutory audit involves several key stages:

  1. Preliminary phase. Collection and analysis of initial information, discussion of audit objectives and scope, risk assessment.
  2. Fieldwork. Direct verification of documentation and accounting records. During this phase, it’s essential to provide auditors with access to all necessary data.
  3. Preliminary findings. Auditors discuss identified issues with company management, allowing time for corrections before the final report.
  4. Audit report. A final document is prepared confirming the accuracy of the financial statements or highlighting existing issues.

Benefits of timely audit preparation

Proper preparation for a statutory audit allows you to:

  • Reduce audit time by avoiding repeat revisions and adjustments.
  • Prevent conflicts with auditors through transparency and open data access.
  • Minimize financial risks by identifying and correcting errors early.
  • Strengthen trust from investors, creditors, and regulatory bodies.
  • Enhance the company’s reputation by confirming transparency and financial discipline.

Conclusion

Preparing for a statutory audit requires a comprehensive approach and attention to financial reporting. By using the provided checklist, avoiding common mistakes, and ensuring effective communication with the auditor, you ensure a high-quality and timely review of your company’s financial statements.
We provide a full range of statutory audit services, ensuring reliable audit outcomes and minimizing business risks.
2025-07-23 15:00