Key points:
- Prevention is better (and cheaper) than crisis management
- Make sure your internal controls are not informal – an audit red flag
- Build confidence in your numbers beyond compliance
Too many businesses only uncover problems during the audit process, such as non-compliance with accounting standards, missing documentation or systems that cannot produce reliable data. By then, fixing them means delays, higher costs and unnecessary stress for finance teams. A financial health check helps avoid this. Think of it as a fitness test that keeps your business in top shape: a focused review of your accounts, controls and processes that highlights issues before they become serious.
What should a financial health check cover?
Accounting Standards compliance
Ensure your financial reporting aligns with current Australian Accounting Standards. This isn’t just a technical box-tick – it ensures your numbers can be trusted by external parties.
Key areas to review:
- Revenue recognition
- Lease accounting
- Goodwill treatment
- Intercompany loans
- Impairment models
- Long service leave calculations
Opening balances
These are the foundation for the current year’s audit. If they’re inaccurate, it can affect the entire audit, so auditors review them first to ensure the correct starting point.
Accounting policies
Review your policies for revenue recognition, asset valuation, provisions and disclosures to confirm they align with current standards. Check things like inventory provisioning and asset useful lives to make sure they are still appropriate.
Documentation and records
Ensure that invoices, contracts, payroll records, and bank reconciliations are current, well-organised, and easily accessible. Your systems should be capable of generating reliable reports and retaining historical data that can be retrieved at any point in time.
Internal controls
Test whether approval processes, segregation of duties and reconciliations are working as intended. Weak or informal controls are a common audit red flag.
Compliance obligations
Confirm you are meeting statutory and regulatory requirements, including ASIC deadlines and any industry-specific rules.
Team readiness
Prepare your finance team for what evidence will be required and who will liaise with auditors. Assign clear roles, outline what documents will be needed, and consider bringing in external support if your team is lean. Engaging auditors late or underestimating the time involved can lead to delays and higher costs.
Stakeholder alignment
Keep your board members, investors, and lenders informed about the upcoming audit to set clear expectations and demonstrate proactive governance. Involve the auditor with the board to outline the audit approach and share key outcomes, ensuring all relevant parties are aligned and engaged throughout the process.
Confidence beyond compliance
A financial health check is not about duplicating the audit. It is about creating confidence in your numbers, your systems and your people. Audit readiness isn’t just about compliance it’s also about clarity. A financial health check should ensure your management reporting aligns with statutory reporting, so there’s no disconnect between what your leadership sees and what your auditor reviews.
For businesses planning growth, funding or a future sale, that confidence can be worth far more than compliance. This kind of audit readiness sends a strong message: We’ve got this. And that kind of confidence can be just as valuable as any compliance tick.
