The PE-Backed SME Audit Readiness Checklist: 50 Controls to Review Before Fieldwork
A practical checklist for Finance Directors who need clean evidence, clear ownership and fewer audit surprises before auditors arrive.
Most audit problems are not discovered during fieldwork. They are created in the months before it — in processes that were never documented, evidence that was never retained, and controls that were assumed to work but never tested.
For finance leaders in PE-backed or growth-stage businesses, the stakes are higher than average. Investors expect clean opinions. Management expect short fieldwork windows. And auditors will test controls that a founder-led business may never have formalised.
This checklist covers the 50 control areas most likely to generate findings, queries or avoidable overrun. Work through them before fieldwork begins.
How to Use This Checklist
For each item, ask three questions:
- Do we have a documented control?
- Is there a named owner?
- Can we produce evidence within 24 hours of a request?
If the answer to any of these is no, that item needs attention before fieldwork.
Section A: Entity-Level Controls (1–10)
1. Organisational chart
Current, board-approved org chart showing reporting lines and named functional owners. Auditors use this to assess segregation of duty risk.
2. Authorisation matrix
A documented schedule of who can approve what — by transaction type, value threshold and business unit. This is one of the first documents requested at fieldwork.
3. Code of conduct and ethics policy
A signed, current policy covering conflicts of interest, gifts, and reporting obligations. PE investors and auditors both look for this as a governance baseline.
4. Whistleblowing mechanism
A named process for raising concerns, with evidence of communication to staff and board-level oversight.
5. Fraud risk assessment
A documented assessment covering the main fraud scenarios relevant to your business, updated at least annually and reviewed by the board or audit committee.
6. Board minutes
Minutes covering all board meetings in the audit period, approved and signed. Auditors review these to understand significant decisions, judgements and approvals.
7. Audit committee terms of reference
Where an audit committee exists, its terms of reference, membership and meeting cadence should be documented and current.
8. Related party register
A complete list of related parties — including investors, directors and connected entities — updated at the start of each audit period.
9. Management representation process
A clear owner for the management representation letter, with a draft reviewed before fieldwork begins.
10. Prior year audit findings log
A tracker showing every prior year finding, the agreed management action, the responsible owner and current status. Auditors will test this directly.
Section B: Financial Reporting Controls (11–20)
11. Financial reporting timetable
A documented close timetable showing deadlines, owners and dependencies for each step of the month-end and year-end process.
12. Trial balance reconciliation
The year-end trial balance tied to the audited comparatives from the prior year and reconciled to the general ledger.
13. Consolidation workings
For group structures, a full consolidation schedule with intercompany eliminations, foreign currency translations and minority interest calculations.
14. Accounting policies document
A written document covering all significant accounting policies, updated to reflect any changes in the period. This forms the basis of Note 1 in the financial statements.
15. Significant estimates workings
For each area of significant estimate — impairment, provisions, revenue recognition, going concern — a working file with assumptions, sensitivities and sign-off.
16. Going concern assessment
A board-approved going concern paper covering at least 12 months from the date of signing, with scenarios and covenant headroom where relevant.
17. Dividends and distributions
Board minutes and supporting calculations for any dividends declared or paid in the period.
18. Debt and covenant compliance
A schedule of all borrowings, repayment terms, and covenant tests, with evidence of compliance testing at each relevant date.
19. Prior period restatements
Where any comparatives have been restated, a clear paper trail showing the reason, calculation and approvals.
20. Financial statements draft
A substantially complete draft of the financial statements before fieldwork begins, including notes. Auditors cannot test what does not exist.
Section C: Revenue and Receivables (21–26)
21. Revenue recognition policy
A written policy covering how revenue is recognised for each material revenue stream, with reference to IFRS 15 or FRS 102 as applicable.
22. Contract register
For contract-based businesses, a register of significant contracts with start dates, terms, variable elements and recognised revenue by period.
23. Cut-off testing schedules
Evidence that revenue cut-off has been applied correctly around the year end, with a sample of transactions checked either side of the period boundary.
24. Deferred revenue schedule
A complete schedule of deferred revenue with supporting calculations and tie to the balance sheet.
25. Debtor ageing and provisioning
An aged debtor report at the year end date, with a documented provisioning policy and evidence of the bad debt calculation.
26. Credit notes post year end
A schedule of credit notes issued after the year end that relate to pre-year-end revenue, used to support cut-off and completeness assertions.
Section D: Expenditure and Payables (27–31)
27. Purchase order and approval process
Evidence that purchase orders are raised, approved and matched to invoices and delivery notes before payment is authorised.
28. Accruals schedule
A schedule of year-end accruals, with supporting calculations, approval sign-off and tie to the financial statements.
29. Creditor reconciliations
Supplier statement reconciliations for all material creditors, completed at the year end and signed off by an appropriate reviewer.
30. Prepayments schedule
A detailed schedule of prepayments with the underlying basis for the calculation and period of the prepaid cost.
31. Expense claim controls
Evidence that expense claims are reviewed, approved by someone independent of the claimant, and coded correctly.
Section E: Payroll and Headcount (32–35)
32. Payroll reconciliation
A reconciliation of the payroll cost per the financial statements to payroll runs, PAYE submissions and the headcount record.
33. Starters and leavers process
Evidence of a documented process for adding and removing employees from payroll, with authorisation records for the period.
34. Bonus and incentive calculations
Supporting calculations for any bonus accruals, including plan rules, performance metrics and the approval chain.
35. Payroll control account
A reconciliation of the payroll control account at year end, cleared to nil or with a documented explanation of any balance.
Section F: Treasury and Cash (36–39)
36. Bank reconciliations
Completed and signed bank reconciliations for all accounts at the year end date and for each month in the period.
37. Cash confirmation
Evidence of confirmations sent to banks for all accounts, with signed responses on file. Auditors typically send these directly but expect your team to track them.
38. Foreign currency exposure
A schedule of foreign currency balances at year end, with the exchange rates used and the source of those rates documented.
39. Petty cash and imprest accounts
Where applicable, a reconciliation of petty cash balances and a log of transactions in the period.
Section G: Fixed Assets and Capital (40–43)
40. Fixed asset register
A complete register showing cost, accumulated depreciation, net book value, location and responsible custodian for all material assets.
41. Additions and disposals
A schedule of additions and disposals in the period, with supporting invoices or disposal proceeds and authorisation evidence.
42. Depreciation policy
A documented depreciation policy covering asset classes, useful lives and residual values, reviewed and approved.
43. Impairment review
Where indicators of impairment exist, a formal impairment review with value-in-use or fair value calculations.
Section H: IT and System Controls (44–47)
44. User access review
Evidence of a periodic review of system access rights — particularly for the financial system, payroll and banking platforms — with leavers removed promptly.
45. Change management log
A log of system changes in the period, including the change description, test evidence and approval before go-live.
46. Backup and recovery
Evidence that data backups are performed regularly, tested periodically and stored securely.
47. Segregation of duties in the ERP
A review of ERP role configurations to confirm that no individual can both initiate and approve a transaction without a second reviewer.
Section I: Compliance and Regulatory (48–50)
48. VAT and tax compliance
Evidence of VAT return submissions, payments and reconciliations for the period, plus a current corporation tax computation or progress update.
49. Regulatory filings
For regulated businesses, a schedule of regulatory filings due and submitted in the period, with copies of confirmations received.
50. Legal and contingent liabilities
A schedule of known legal claims, with solicitor correspondence and an assessment of the likely outcome and financial exposure.
What to Do Now
Work through this list with your finance team before auditors arrive. Any area where you cannot quickly name an owner, produce evidence or point to a documented control is a risk — not just to the audit, but to your broader governance standing with investors and the board.
If you would prefer to run a structured readiness review before fieldwork, that is exactly what we do at MOU Consulting. We help PE-backed and growth-stage businesses close the gap between where controls are and where they need to be.