Annual audit fees can often be substantial.
However, in terms of reducing the overall cost of an audit you need to understand what is involved in the audit and what you can do to substantially reduce the amount of work carried out by the auditors thus providing an opportunity to reduce the likely fees.
Essentially the auditor needs to carry out a number of tasks and in order to do these the auditor needs information:
1) Understand the balance sheet and obtain evidence for each material account
2) Choose samples of transactions from the P&L and confirm that they have been treated correctly
3) Check cut off
4) Establish if the company is complaint
5) Check if the controls and systems are adequate and working
6) Establish if the company has sufficient prospects
7) Check accounting treatment
8) And many more things
In order for the auditor to start their work they need information.
The back and forth of requesting and chasing information can take at least 10% of the time involved of the entire audit.
Therefore, if you can provide all the information ahead of when the audit starts then this allows the audit team to commence and progress without the need to keep stopping and starting.
I propose that you set up a secure depository in the cloud and collate and organise your records.
Within the depository set up some directories such as:
Management accounts for the year and after
Trial balance and journals
Bank statements and mandates for the entire year and since the year end
Purchase invoices for the year and after
Sales invoices for the year and after
Payroll monthly reports; employment contracts and other related matters
Staff hierarchy
Fixed assets register and workings
Stock take and workings
Trade debtors and provisions
Other assets
Trade creditors
VAT
Corporation tax
Other creditors
Share capital and reserves
Board and management minutes for the year and after
Insurance policies
Articles of association, registers and other company secretarial matters
Share structure and group structure
Claims and disputes – summary and any correspondence and documents
Lease and any delapidations calculations
All significant agreements
Regulatory matters such as licenses, ICO certificate etc
Funding matters
Forecasts and budgets
There may be others that you believe are relevant
Although the above looks like a lot of work, which of course it is, this information is going to have to be provided and collated at some time.
By doing it ahead of the audit and committing to do so allows you to negotiate fees.