The first audit.
Most investor-backed companies meet the statutory audit obligation in their first or second year, before anyone has planned for it.
Solutions · Audit readiness
Audit readiness for startups and technology companies
Numminen Advisory prepares technology companies for statutory and group audit. Audit readiness means the company can evidence, reconcile and explain its own numbers before the auditor asks, so that the audit tests what the auditor is there to test, without first establishing how the accounts were assembled.
An audit does not go badly because a company did something wrong. It goes badly because the evidence for ordinary decisions was never assembled at the time, and assembling it afterwards takes weeks the close calendar does not have.
Revenue cut-offIntercompanyFixed assetsRelated party
3 settled, 1 open
When companies need this
Four situations, and the work differs in each.
A change of auditor.
A new firm re-tests opening balances and accounting policies that the previous firm had accepted for years. Long-standing treatments get reopened, usually at the worst moment.
The first group audit.
Consolidated figures, intercompany eliminations and subsidiary reporting packages all get examined together for the first time, and a group audit is a different exercise from three separate company audits.
A hard audit last year.
Management letter points that were never closed come back, and the second year is where an auditor decides whether the finance function is improving or drifting.
AI in finance
How AI changes audit readiness work
In audit readiness, AI does the tracking and the tie-outs. It matches each auditor request to its support, ties lead schedules to the trial balance and flags gaps weeks before fieldwork. At Numminen Advisory, Joanna Numminen reviews what goes to the auditor and owns the judgement calls the audit will test.
| Finance task | What AI does now | What stays with the CFO |
|---|---|---|
| PBC list | Tracks each auditor request to its supporting document. | What is sent to the auditor, and in what form. |
| Lead schedules | Builds lead schedules from the trial balance and ties them out. | Review of the balances and the explanations behind them. |
| Reconciliations | Ties bank and sub-ledgers to the general ledger every working day. | Resolution of breaks and any adjustments. |
| Contracts and leases | Flags contracts without matching support or an accounting treatment. | The treatment chosen, and the position taken with the auditor. |
How we run it
- Joanna trained in audit at Deloitte, so the workspace is built around what auditors ask for.
- The PBC tracker runs every working day at 7:00 in the months before fieldwork.
- Nothing goes to the auditor without CFO approval.
What auditors ask for, and where it goes wrong
Seven areas account for most of the friction.
Revenue recognition. The policy written down, the contracts behind it, and evidence that the policy was applied the same way all year.
Development cost capitalisation. The criteria applied, the judgement recorded at the time, and hour data that supports the amounts.
Grant and public funding income. Recognition timing, the conditions attached, and whether anything remains repayable.
Intercompany and group balances. Both sides agreeing, in the same period, with the elimination logic documented.
Cut-off. Accruals, prepayments, deferred revenue and unbilled receivables landing in the period they belong to.
Controls and authorisation. Who approved what, evidenced and documented. In a company of forty people this is usually the weakest area, and it is the one auditors comment on most.
Risk mitigation procedures. Policies and evidence that the company is safeguarding itself against internal and external threats.
The pattern underneath all seven is the same. The decision was reasonable. The record of having made it deliberately does not exist.
What the work involves
Preparation runs ahead of the audit, not alongside it.
A readiness review
Each area above tested against the evidence that exists, producing a written list of findings ranked by audit risk and by effort to close.
Remediation, prioritised
Policy documents written where they are missing, reconciliations rebuilt where they do not tie, and judgements recorded while the people who made them can still remember why.
An audit file your team maintains
Schedules prepared in the format the auditor expects, owned by your controller rather than by us, so that next year’s audit starts from an existing file.
How to engage
Audit readiness review
A fixed-scope diagnostic over three to five days, ending in a written findings memo with a ranked remediation list and an estimate of the effort behind each item.
Remediation
Quoted as a project against the findings, or absorbed into a retainer where the company already has one. Companies preparing a first group audit usually need the consolidation work as well, which is scoped on its own page.
Who does this work
Numminen Advisory is founded and run by Joanna Numminen. She trained in audit at Deloitte before moving in-house, so the preparation is written from the auditor’s side of the table as well as the company’s. She has carried Finnish statutory reporting, IFRS and US GAAP concurrently in a multi-entity group, built control frameworks from scratch, and taken public funding through cost reporting and audit. She has been ACCA qualified since 2017.
What doing it late costs
An unprepared audit costs money in three places at once. Audit fees rise, because the firm bills the time it spends finding things you could have handed over. The close runs long, because your controller is answering questions while the next month waits. And the management letter gets longer, which is the document an investor reads first when diligence starts.
Common questions
What is audit readiness?
Audit readiness is the state of having the evidence, reconciliations, policies and documented judgements an auditor will request, assembled before the audit begins. It is preparation work carried out by the company, not part of the audit itself.
When is a Finnish company required to have an audit?
An auditor must be appointed unless at most one of three limits was met in both the ended and the immediately preceding financial period: a balance sheet total over 100 000 euros, turnover over 200 000 euros, or an average of more than three employees. Most investor-backed companies exceed two of the three quickly.
How far ahead should we start?
Three months before the year end for a first audit. Earlier if the year includes a new entity, a change of accounting framework or a significant grant.
Can our auditor tell us how to prepare?
They can describe what they will request, and they should. They cannot prepare it for you without compromising their own independence, which is the gap this work sits in.
Is this the same as an internal audit?
No. Internal audit is an ongoing assurance function reporting to a board or an audit committee. This is time-bounded preparation for an external statutory audit.
We use a Big Four firm. Does that change anything?
It raises the standard of documentation expected and the cost of failing to meet it. The preparation work is the same work.
Does this overlap with diligence preparation?
Substantially, and deliberately. Roughly two thirds of an audit readiness file is reusable in a data room, which is why companies with a round and an audit in the same year should sequence the two rather than run them separately.