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CFO Services

Controls that hold, and a file your auditor can work from

Most first audits go badly for reasons that were fixable three months earlier and free.

In short

Audit readiness is the work of making a business auditable before the auditor arrives: reconciliations complete, revenue recognition written down, related-party transactions documented, provisions supported, and a delegation-of-authority matrix that shows who could commit the company to what. Keel Partners builds that framework and file. We are not auditors and we do not sign accounts.

Diagnostic

The control questions most owner-led businesses cannot answer

Who can commit the company?

To what value, with whose approval, and where is that written down? A delegation-of-authority matrix is an afternoon's work and almost nobody has one.

Can one person complete a payment alone?

Raise the purchase order, approve the invoice, release the funds. If that is one person, the control gap is not theoretical.

When does the month actually close?

If the answer is 'about the twentieth', the reporting is history rather than management information.

How is revenue recognised?

Written policy, or whatever the bookkeeper has always done? Auditors ask this first and buyers ask it second.

Are related-party transactions documented?

Owner drawings, group recharges, family salaries. Undocumented, these are the most common audit adjustment in this market.

Is gratuity provisioned or just mentioned?

A note in the accounts is not a provision, and a provision is not cash.

Deliverable

The audit-readiness file

  • Bank, receivable, payable and inter-company reconciliations, current and signed off
  • Written revenue recognition policy, applied consistently across the period
  • Fixed asset register agreeing to the ledger, with depreciation policy stated
  • End-of-service gratuity calculation per employee, with the basis shown
  • Related-party schedule: who, what, how much, on what terms
  • Provisions and accruals with the supporting judgement written down
  • Delegation of authority matrix and month-end close checklist
  • A gap list with a date and an owner against every open item
Scope note. Keel Partners FZE LLC is not a licensed audit firm. We prepare a business for audit as a management consultancy engagement. The audit itself, and any assurance opinion, is performed and signed by a licensed audit firm.

FAQ

Frequently asked

When should we start preparing for a first audit?

Three to six months before year end, not three weeks after it. Almost everything that makes a first audit expensive — missing reconciliations, undocumented related-party transactions, no revenue policy — is cheap to fix while the period is still open.

Do you appoint the auditor?

You appoint them. We will introduce two or three so you can compare on scope and fee, and we take no referral fee for doing so.

We are a free-zone company. Do we need an audit?

Many free zones require audited financial statements for licence renewal, and banks and buyers increasingly expect them regardless. Check your own free-zone authority's requirement, and note that needing one and being ready for one are different problems.

Is this the same as internal audit?

No. Internal audit tests whether controls are working. We are designing and documenting the controls in the first place, which is the step that has to come first.

Pratap ChandraFounder & Managing Partner, Keel Partners
IIM Calcutta (PGPEX). 20+ years running P&Ls in FMCG, retail and healthcare across India and the GCC.

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