Preparing the right documents is an important part of an efficient audit process. Auditors need reliable evidence to examine financial transactions, account balances, disclosures, and other information included in a company’s financial statements.
For businesses arranging a Singapore Audit Service, having financial records and supporting documents organized in advance can make information requests easier to manage. The exact documents required vary according to the company’s activities, financial reporting framework, size, and audit scope.
Financial Statements
The company’s financial statements are central to the audit process.
Businesses should prepare the relevant statements and accompanying notes for the reporting period. These may include the statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows.
Trial Balance
A final or near-final trial balance provides an overview of the company’s ledger balances.
Auditors may use the trial balance as a starting point for understanding the accounts and reconciling amounts to the financial statements.
General Ledger
The general ledger contains detailed records supporting the balances presented in the trial balance.
Auditors may review ledger activity, significant transactions, adjustments, and unusual entries to determine which areas require further examination.
Bank Statements and Reconciliations
Bank statements provide evidence relating to the company’s cash balances and transactions.
Businesses should also prepare bank reconciliation statements showing differences between the accounting records and bank balances. Supporting documentation for significant reconciling items should be available.
Accounts Receivable Records
For businesses that sell on credit, accounts receivable documentation is commonly required.
Useful records may include:
- Customer aging reports
- Customer statements
- Sales invoices
- Credit notes
- Receipts
- Subsequent payment records
- Details of disputed or long-outstanding balances
These documents can help auditors assess receivable balances and related transactions.
Accounts Payable Records
Accounts payable records help demonstrate the company’s outstanding obligations.
Businesses may need to provide supplier aging reports, supplier statements, invoices, payment records, and information about significant outstanding balances.
Auditors may also examine payments made after the reporting date when assessing whether liabilities were recorded in the appropriate period.
Sales and Revenue Documentation
Revenue transactions may be supported by several types of documentation.
Depending on the business, auditors may request sales invoices, customer contracts, purchase orders, delivery records, receipts, credit notes, and sales reports.
These records help auditors examine whether recorded revenue is supported and appropriately recognized.
Expense Documentation
Expenses should be supported by appropriate records.
Common documents include supplier invoices, receipts, contracts, payment records, expense claims, and approval documentation. Significant or unusual expenses may receive additional audit attention.
Inventory Records
Businesses holding inventory should maintain accurate stock records.
Relevant documentation may include inventory listings, stock count sheets, warehouse records, purchase invoices, costing information, and details of damaged or obsolete goods.
The auditor may also perform procedures relating to physical inventory quantities and valuation.
Fixed Asset Register
A fixed asset register provides information about assets owned or controlled by the company.
It may include asset descriptions, acquisition dates, costs, depreciation, accumulated depreciation, and disposals. Purchase invoices, disposal documents, and other supporting evidence should be retained for significant assets.
Loan and Financing Documents
Companies with loans or other financing arrangements should organize relevant agreements and schedules.
Auditors may review loan contracts, repayment schedules, interest calculations, security arrangements, and correspondence with financial institutions.
Payroll Records
Payroll documentation can support employee-related expenses and liabilities recorded in the financial statements.
Depending on the audit scope, relevant records may include payroll summaries, salary records, bonus calculations, payment reports, and other employee-related documentation.
Tax Records
Tax-related records may also be relevant to the audit.
Businesses should organize applicable tax computations, tax correspondence, supporting schedules, and records relating to tax balances reported in the financial statements.
The exact information required will depend on the company’s tax circumstances.
Contracts and Agreements
Significant contracts can provide important information about the company’s financial obligations and rights.
Auditors may request agreements relating to customers, suppliers, loans, leases, property, major purchases, or other significant business arrangements.
Share Capital and Corporate Records
Companies should maintain relevant corporate records supporting changes in ownership and equity.
Depending on the circumstances, auditors may need information such as share registers, records of share issuances, dividend documentation, board resolutions, and shareholder resolutions.
Related-Party Information
Businesses should identify relevant related parties and transactions.
Supporting information may include details of transactions with directors, shareholders, subsidiaries, associated companies, or other related parties, together with relevant agreements and balances.
Accounting Estimates and Calculations
Certain financial statement amounts depend on management estimates.
Businesses should retain documentation supporting significant estimates, calculations, assumptions, and judgments. Examples can include impairment assessments, provisions, depreciation assumptions, and expected credit loss calculations.
Journal Entry Reports
Auditors may request reports of journal entries posted during the reporting period.
Supporting explanations and documentation should be available for significant or unusual adjustments, particularly those recorded near the reporting date.
Minutes and Governance Records
Minutes of board meetings and relevant management or shareholder meetings can provide information about significant business decisions.
Auditors may review these records to identify matters that could affect the financial statements, such as major transactions, financing arrangements, disputes, or changes in business structure.
Legal and Regulatory Documents
Information relating to significant legal matters may be relevant to financial reporting.
Businesses may need to provide details of ongoing or potential disputes, claims, commitments, or other matters that could require recognition or disclosure in the financial statements.
Subsequent Events Information
Auditors may ask about significant events occurring after the reporting date.
Businesses should inform the audit team about material developments such as major transactions, financing arrangements, significant losses, acquisitions, or other events that could affect financial reporting or disclosures.
How to Organize Audit Documents
A structured document system can make the audit process easier for everyone involved.
Businesses can create separate folders for:
- Financial statements and trial balance
- Bank and cash records
- Revenue and receivables
- Purchases and payables
- Inventory
- Fixed assets
- Payroll
- Loans and financing
- Tax records
- Corporate and legal documents
Using consistent file names and clearly labeled folders can reduce the time needed to locate requested information.
Create an Audit Preparation Checklist
An audit checklist can help management track documents before fieldwork begins.
The checklist can identify the requested document, responsible employee, submission date, outstanding questions, and completion status. This is particularly useful when several departments need to provide information.
Keep Supporting Records Consistent
Documents should generally agree with the underlying accounting records.
If a balance in the general ledger differs from a supporting schedule, investigate the difference before submitting the information. Resolving inconsistencies early can reduce unnecessary questions during the audit.
Ask About Specific Requirements
There is no universal list of documents that applies identically to every company.
Businesses should communicate with their audit team about the specific information required for the engagement. A manufacturing company, for example, may have different documentation needs from a professional services business.
Conclusion
The documents required for a Singapore audit service can cover a wide range of financial and business records. Financial statements, ledgers, bank records, invoices, receivables, payables, inventory information, fixed asset schedules, contracts, tax records, and corporate documents may all be relevant.
Preparing these materials early and keeping them organized can make the audit process more efficient. Businesses should also confirm the specific requirements with their audit team because documentation needs depend on the company’s activities, financial reporting circumstances, and audit scope.
