Five priorities for a smoother year-end audit

A difficult year-end audit is rarely caused by one unexpected issue. More often, pressure builds because information arrives late, judgements remain unresolved and finance teams have too little time to review evidence before audit fieldwork begins.

For December year ends, the final quarter is the opportunity to get ahead. Companies applying FRS 102 are implementing the most significant changes to UK accounting practice for many years. International Financial Reporting Standards (IFRS) reporters are also generating comparative information for IFRS 18.

To manage these demands, what helps most is a practical, shared plan that connects accounting conclusions, data, controls, capacity and audit evidence

The Financial Reporting Council’s latest Annual Review of Corporate Reporting identifies cash flow statements, financial instruments, impairment, fair value measurement and revenue as the most common areas of substantive challenge.

These findings are consistent with what we see in practice. Problems often arise not because finance teams lack technical knowledge, but because key issues are identified too late or the evidence does not clearly tell the story behind management’s conclusion.

Start with an honest conversation about what made last year audit process harder than it needed to be. Review the audit adjustments, control findings, late papers and recurring questions. If there were audit overruns, what was the rationale given by the auditor? Was the underlying issue ownership, data quality, an unresolved accounting position or insufficient capacity?

Agree the few actions that will make the biggest difference, then give each an owner and a date.

Bring the most judgemental transactions and estimates into the open early, including impairment models, revenue judgements, fair values, provisions, going concern, refinancing, acquisitions, disposals and unusual contract terms. We find that short, decision-led papers create better conversations than lengthy technical analysis.

Set out the facts, relevant requirements, management’s judgement and ensure that multiple perspectives are considered before landing on a position, sensitivities and conclusion. Then discuss the approach with the auditors before year end, especially where specialist input or third-party evidence will be needed.

AI can help extract contract terms, identify relevant guidance and structure a first draft, but management remains responsible for the judgement. An experienced reviewer should challenge the facts, conclusions and supporting evidence before any AI-assisted paper is shared with auditors. Read about this in more detail: Can AI draft accounting position papers effectively?

Finance cannot complete the close alone. Bring tax, treasury, HR, legal, component finance teams and external advisers around one realistic timetable. Be clear about what each contributor must provide, what good looks like and when issues need to be escalated. Most importantly, protect time for management review rather than planning to deliver straight to the auditor, and leave flexibility in the timetable to absorb matters arising through the process.

Ask someone who was not involved in preparing the paper to read it. Can they understand its purpose, source data, method, key assumptions, review and conclusion without a separate explanation? If not, an auditor is likely to ask the same questions.

Reconcile schedules to the ledger and draft financial statements, retain clear evidence of review and keep version control simple. When information changes, update both the calculation and the narrative.

Be realistic about the people available to prepare and review the critical work. Annual leave, competing projects and reliance on one specialist can quickly become pressure points.

Where the team needs support, focus it on the specific bottleneck, whether that is a technical paper, consolidation, financial statement preparation, evidence packs or audit request management. Additional support should help the team deliver critical work more effectively and relieve pressure on key bottlenecks.

Finally, it’s important not to run standards transition as a separate project, both FRS 102 reporters and IFRS reporters should incorporate the work into this process.

The Periodic Review 2024 amendments apply for periods beginning on or after 1 January 2026. The main changes include revised models for revenue and lessee accounting, as well as changes to fair value measurement and other areas. For a December year end, the new requirements are already shaping 2026 transactions and data.

Confirm policy choices and transition methods, complete contract and lease populations, quantify opening impacts, refresh controls and agree the financial statement presentation before the close.

AI may accelerate contract reviews and draft transition documentation, but organisations should validate completeness, technical accuracy and key judgements through appropriate human review.

If you are still working through your FRS 102 transition and have not yet locked down your accounting policies, quantified the impact or prepared draft transition disclosures, now is the time to close the gap.

Start with our FRS 102 hub for practical guidance or use our FRS 102 health check tool to identify potential exposure and areas requiring further review, disclosures, process changes and auditor engagement needed for a successful transition.

IFRS 18 is effective for periods beginning on or after 1 January 2027 and replaces IAS 1. It introduces defined categories and subtotals in the statement of profit or loss, disclosures for management-defined performance measures and enhanced aggregation and disaggregation requirements. For December year ends, 2026 is the comparative period. Financial statements should clearly explain to readers how the new requirements will impact the business.

Map the income statement, identify management-defined performance measures, assess data requirements and engage auditors and audit committees early. 

Find out more about IFRS 18: How the new presentation requirements will change financial statements.

We are working alongside a business that was carved out of a larger group and acquired by private equity. Following the transaction, we helped establish opening accounting positions and are now supporting the finance team as it builds standalone reporting processes and prepares for its first Big Four audit. Our support combines technical accounting, audit project management, evidence review and auditor liaison, giving management visibility of key issues while building internal capability.

For another business, we are helping the finance team bring forward the preparation and review of audit evidence rather than waiting for fieldwork to begin. Together, we are identifying critical evidence requirements and building review-ready files before year end. The programme is expected to shorten the audit cycle, reduce retrospective queries and release management time for higher-value priorities. The goal: fewer surprises and better decisions.

The best year-end processes are collaborative. Management, finance teams, specialists and auditors understand the timetable, surface difficult issues early and know what evidence is needed. That does not remove every challenge, but it creates the time and trust needed to resolve them well. The audit can then focus on assurance rather than resolving issues that should already have been addressed during the close process.

Audit-readiness challenges vary between organisations, so we start by identifying where delays, rework and audit pressure are arising. Our audit-readiness diagnostic reviews the close process, evidence and key risks before agreeing a practical 30, 60 and 90-day roadmap with management.

Where additional capacity is needed, we can provide targeted support across technical accounting, quality review, project oversight and audit delivery.