Audit Readiness Checker

When to Use

• 60–90 days before a scheduled external audit
• When preparing for SOX compliance for the first time
• After prior audit findings need remediation verification
• When internal audit wants a pre-flight check

Procedure

Step 1 — Map Assertions to Accounts

For each material account balance, map the relevant audit assertions:

Assertion	What It Tests
Existence/Occurrence	Did the transaction/asset actually happen/exist?
Completeness	Are all transactions recorded?
Valuation/Accuracy	Are amounts recorded correctly?
Rights & Obligations	Does the entity own/owe the amounts?
Presentation & Disclosure	Is it properly classified and disclosed?
Cut-off	Are transactions in the correct period?

Step 2 — Check Evidence Completeness

For each assertion per account, verify supporting evidence:

1. Source documents (invoices, contracts, bank statements)
2. Reconciliations (bank, intercompany, sub-ledger to GL)
3. Approvals and authorization records
4. Third-party confirmations
5. Management representations and estimates documentation

Step 3 — Score Readiness

Score	Criteria
🟢 Green	All evidence available, reconciled, no open items
🟡 Amber	Evidence partially available, minor gaps, reconciliation in progress
🔴 Red	Missing evidence, unreconciled, prior audit finding unresolved

Step 4 — Generate Remediation Plan

For each 🟡 and 🔴 item:

1. Describe the gap
2. Assign an owner
3. Set a deadline (must be before audit fieldwork)
4. Define the evidence deliverable

Inputs

Input	Required	Format
Trial balance	Yes	Account list with balances
Prior audit findings	Recommended	Management letter or audit report
Audit timeline	Yes	Fieldwork start date
Supporting schedules	Recommended	Reconciliations, roll-forwards

Output

## Audit Readiness Scorecard — [Entity] — [Audit Period]

### Overall Score: 🟡 AMBER (72% ready — 12 weeks to fieldwork)

### By Account Area

| Account | Assertion | Evidence | Status | Gap | Owner | Deadline |
|---------|-----------|----------|--------|-----|-------|----------|
| Cash | Existence | Bank confirmations | 🟢 | — | — | — |
| Cash | Completeness | Bank reconciliation | 🟢 | — | — | — |
| AR | Existence | Confirmations | 🟡 | 3 confirmations pending | AR Lead | Week 8 |
| AR | Valuation | Aging + allowance | 🔴 | Allowance model not updated | Controller | Week 6 |
| Revenue | Cut-off | Shipping docs | 🟢 | — | — | — |
| PP&E | Existence | Physical count | 🔴 | Count not scheduled | Ops Mgr | Week 4 |

### Prior Findings Status

| Finding | Year | Status | Remediation |
|---------|------|--------|-------------|
| Inventory count procedures | 2024 | 🟡 In progress | New SOP drafted, testing pending |
| AR confirmation process | 2024 | 🟢 Resolved | Automated via NetSuite |

### Remediation Timeline

| Week | Action | Owner |
|------|--------|-------|
| Week 4 | Schedule PP&E physical count | Ops Manager |
| Week 6 | Update AR allowance model | Controller |
| Week 8 | Complete AR confirmations | AR Lead |
| Week 10 | Final reconciliation review | CFO |
| Week 12 | Audit fieldwork begins | — |

Definition of Done

• All material accounts mapped to audit assertions
• Evidence completeness checked per assertion
• RAG status assigned to every account/assertion combination
• Prior audit findings tracked with remediation status
• Remediation plan with owners and deadlines for all 🟡/🔴 items
• Timeline fits before audit fieldwork start

Examples

Prompt

Our external audit fieldwork starts in 12 weeks for FY2025.
Here is our trial balance: [paste]. Prior year findings: AR confirmation delays, inventory count gaps.
Assess our audit readiness and create a remediation plan.

Quality Criteria

• Every finding is tied to a specific evidence source (log, test, metric)
• Pass/fail criteria are binary and measurable — no subjective judgments
• Severity levels are assigned with clear thresholds
• Remediation steps are provided for all critical and high findings

Verification (4C)

Check	Question
Correctness	Are all pass/fail criteria applied against the correct standard or rule?
Completeness	Were all required dimensions or checklist items evaluated?
Context-fit	Does the verification scope match the actual risk level of the deliverable?
Consequence	If this passed verification but had a hidden flaw, what is the worst-case impact?

Edge Cases

• Incomplete data for full assessment — Document which checks were limited and flag for re-verification when data becomes available.
• Ambiguous pass/fail criteria — Request clarification from the standard owner before scoring. Mark as 'Needs Review'.
• Multiple overlapping standards — Identify the governing standard and note where others diverge.

Changelog

• v1.0.0 — Initial release