Five tips to ensure your portfolio companies are audit ready

Updated: December 12, 2024

If you are the owner of any sort of for-profit organization, preparing for an audit can be quite stressful.

An audit is designed to objectively evaluate your firm’s financial position and confirm that your organization complies with all relevant laws. No matter what industry you may be in, an audit can have a tremendous impact on your company’s well-being.

Preparing for an audit might initially feel overwhelming. But by keeping these few simple tips in mind, your firm can be better positioned for long-term success.

Understand How an Audit Works

You may be surprised by how many CEOs and CFOs do not fully understand how an audit works. This can make the entire process much more difficult, unorganized and time consuming.

Doing things such as creating a specific audit plan, clearly defining audit objectives, and declaring everything that will be needed for the audit can help you avoid unexpected surprises.

You may also want to do things such as testing transactions to ensure absolute accuracy.

Consolidate Your Report

Consolidating the various pieces of information that are required in an audit can help your firm reduce the risk of redundancies or inaccurate information. Consolidation does not mean leaving out important details — it means striving to gather, organize and present data in the most efficient way possible.

To prepare for consolidation, your firm should begin by installing software designed for this specific purpose. Checking for formula errors, necessary capabilities (such as currency conversions) and other automated details will be very important leading up to the audit.

Organize Accounts Receivable

The accounts receivable category is one of the things auditors are most likely to take a close look at. Most auditors will be looking for several things.

When determining the collectibility of a given account, it is important to use a consistent set of criteria. Whether you determine this from historical patterns, adaptable formulas or any other legitimate method is something that will remain up to you. But be as consistent as you can possibly be.

Be Consistent When Recognizing Revenue

Recognizing revenue also requires a consistent set of criteria. Revenue streams affect both your income statement and balance sheet. Consequently, the way revenue is reported is one of the foremost concerns of a typical auditor.

There are many relevant variables in the world of revenue reporting. The timing of reported revenue streams is incredibly important. Though these reports require significant subjective decision-making, doing things such as creating a reliable methodology and installing audit-friendly software can be quite helpful.

Pay Attention to the Details

Though an audit may report a big-picture interpretation of how your firm is doing, this picture is really just a composite of many small details produced along the way. Before finalizing any reports, it is absolutely essential that you pay attention to the details.

These simple — but important — tips are just an introduction to how your firm can prepare for an audit and can help orient you in the right direction.

Related Resources

Businessman in suit standing in front of blue wall
ArticleFinancial Leadership

5 things private equity investors want out of the CFO

The CFO (Chief Financial Officer) is a financial expert responsible for managing the money dealings of a company. For a private equity investor, a CFO ...
White graphs and maps superimposed over hands holding paper
ArticleMetrics

5 Most Important SaaS Metrics Investors Need to See

These are the five most important metrics at each stage of your journey to reach $100 million with your SaaS company.
Yellow school bus with NYCSBUS in black letters
Case StudyNonprofit

Nonprofit Finance: How the FaaS Model Transformed NYCSBUS in Just 30 Days

NYCSBUS leverages Consero's Finance as a Service model, tailormade for nonprofits, to achieve remarkable financial transformation in 30 days.
Hand stacking blocks with dollar signs into a pyramid
ArticleMetrics

The Ultimate Guide to Monthly Recurring Revenue (MRR)

MRR is like a power plant for subscription-based businesses, fueling growth when understood properly.
Man in dress shirt next to man in blazer in hallway
Finance as a ServiceNonprofit

How A Nonprofit CEO Leveraged Finance as a Service

Kelsey Louie, CEO of The Door, a youth services nonprofit, discusses how Finance as a Service (FaaS) transformed the organization's financial management, operational efficiency, and ...
ArticleFinance & Accounting

How To Create a Cash Flow Forecast

Predicting future cash flow plays a critical role in maintaining the company’s health, and yet many small businesses have no satisfactory forecasting mechanism in place. ...

Finance as a Service

Cutting edge technology, processes, and people in a fully-managed solution to deliver precise financial visibility and improved operational scalability, plus a lower and more predictable cost structure. 

Flex Finance

Keep your existing technology and processes. We can manage the back-office F&A function from end-to-end process, including closing the books. When you need skilled talent, we can supplement your F&A team.

Advisory Services

Expert advice and strategies to help you grow.

• CFO Advisory Services
• FP&A and Reporting
• Technical Accounting & Clean-Up

Consero FaaS: Disrupting the Outdated Traditional F&A Model

Transformation
  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
  • or Consero Fractional CFO
  • Consero FaaS Enterprise F&A Software and Services

New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
  • Monthly financials available in 5-10 business days
  • Audit and diligence ready support details
  • Integrated enterprise grade accounting software
  • Budget and forecast reporting
  • Business KPIs
  • Efficient & scalable processes for rolling in add-ons