Completing the annual audit is a major milestone for any company. After weeks of preparing documents, answering audit queries and making necessary adjustments, receiving the final audited financial statements can feel like the end of the compliance process.
However, the completion of the audit is not necessarily the end of the company’s responsibilities.
There are still important steps to take after the audit, including statutory lodgements, tax compliance, reviewing audit findings and preparing for the next financial year.
Here are five common mistakes companies should avoid after completing their annual audit.
1. Assuming the Audit Completion Means Everything Is Done
One of the most common misconceptions is that once the audited financial statements are signed, there is nothing else to do.
In reality, companies may still need to complete their relevant statutory and tax obligations.
For example, companies should coordinate with their company secretary to ensure the required annual submissions are completed within the applicable deadlines.
SSM states that annual submissions include the Annual Return and Financial Statements and Reports, with specific submission timeframes depending on the type of company. SSM also states that annual documents are lodged through MBRS by the appointed company secretary or company’s agent.
Therefore, after receiving the final audited financial statements, management should confirm:
- Has the financial statement been signed?
- Has the company secretary received the final documents?
- Is the Annual Return due?
- Has the financial statement been lodged with SSM?
- Has the company received confirmation of submission?
Audit completion and statutory lodgement are two separate steps.
2. Forgetting to Update the Tax Computation After Audit Adjustments
Another common mistake is preparing the tax computation based on an earlier set of accounts and failing to update it after the audit adjustments are finalised.
During an audit, adjustments may be made to areas such as:
- Revenue
- Expenses
- Accruals
- Provisions
- Trade receivables
- Trade payables
- Fixed assets
- Depreciation
- Retained earnings
- Other accounting classifications
If these adjustments affect the company’s taxable position, the tax computation should be prepared using the final financial figures.
It is important to remember that accounting profit and taxable income are not necessarily the same.
The tax computation may require adjustments for items such as non-deductible expenses, capital expenditure, capital allowances and other tax-specific treatments.
A simple reconciliation between the final audited accounts and tax computation can help identify inconsistencies before submission.
3. Ignoring Audit Findings Once the Adjustments Are Posted
An audit adjustment may correct an accounting error, but simply posting the adjustment does not necessarily solve the underlying problem.
For example, suppose an auditor identifies that several months of expenses were not accrued because management only records expenses when invoices are received.
The accounting adjustment may correct the current year’s financial statements.
But if the same process continues next year, the same issue may arise again.
After the audit, management should ask:
“Why did this happen in the first place?”
Common issues identified during an audit may include:
- Bank accounts not reconciled regularly
- Missing supporting documents
- Expenses recorded in the wrong period
- Incorrect classification of transactions
- Old outstanding receivables
- Unrecorded liabilities
- Incomplete fixed asset records
- Weak approval procedures
The objective should not simply be to correct the current year’s accounts. It should be to prevent the same issue from recurring.
4. Failing to Review the Company’s Financial Performance
Some companies receive their audited financial statements, sign them and file them away without actually reviewing what the numbers are telling them.
This is a missed opportunity.
The audited financial statements provide management with useful information about the company’s financial position and performance.
After the audit, directors should consider questions such as:
Is revenue increasing?
If revenue increased significantly, did the company’s profit increase at the same rate?
Are expenses growing faster than revenue?
An increase in operating costs may be reducing profitability even when sales are growing.
Are customers paying on time?
A company can report a profit while still experiencing cash-flow pressure because of slow collection from customers.
Has the company’s debt increased?
Management should review loans, interest expenses and repayment commitments.
Is the company generating sufficient cash?
Profitability and cash flow are not the same thing.
Reviewing these areas after the audit can help management make better financial decisions for the next financial year.
5. Waiting Until the Next Audit to Start Preparing
Perhaps the biggest mistake is treating the annual audit as something that only needs attention once a year.
If accounting records are only cleaned up when the auditor arrives, the next audit is likely to become stressful again.
Instead, companies should use the completed audit as a starting point for improving their accounting processes.
Consider implementing simple monthly procedures such as:
- Monthly bank reconciliations
- Regular review of trade receivables
- Regular review of trade payables
- Monthly management accounts
- Timely recording of expenses
- Proper filing of invoices and receipts
- Regular fixed asset register updates
- Review of loans and financing balances
- Monthly review of unusual transactions
Good accounting records throughout the year can make the next audit significantly smoother.
Conclusion
Completing your annual audit is an important milestone, but it should not be treated as the final step of the company’s financial year.
Companies should follow up with the relevant statutory and tax submissions, review audit adjustments, address control weaknesses and use the audited financial statements to make informed business decisions.
Most importantly, don’t wait for the next auditor’s request list to start preparing.
The work you do immediately after completing this year’s audit can make next year’s audit much smoother.
A completed audit closes one financial year — but good post-audit practices help you prepare for the next one.