When Should You Start Preparing for an Audit?(Hint: It’s Earlier Than You Think)
Kyle Geers
December 1, 2025
The Wake-Up Call Every CFO Gets Too Late
If you’re leading finance at a high-growth startup, here’s a hard truth: Audit season starts long before January.
By the time the PBC list (Prepared By Client request list) hits your inbox, you’re already behind. What should have been a steady process becomes a sprint, and every day lost in prep can push your audit.
Whether your audit is 3 months away or 10 months away, here’s what to prioritize now to make the process smooth and stress-free.
“The best fundraising and audit outcomes don’t come from the strongest growth story; they come from the cleanest books.”
Why “Start Early to Finish Strong” Works in Audit Prep
Audit readiness isn’t just about being compliant; it’s about preserving momentum. Teams that “start early to finish strong” avoid the chaos of last-minute fixes. In a recent video, Kyle and Danielle broke this down with a simple analogy: treat audit prep like dental hygiene. If you handle the small cleanings throughout the year, you avoid the root canal later.
That “root canal” moment—the scramble to reconcile accounts, write memos, and defend every number—is what costs startups most. Early preparation saves both time and money by allowing teams to:
- Identify high-risk areas (revenue recognition, leases, stock comp) early
- Spread work over several months instead of cramming it into Q1
- Collaborate effectively with auditors instead of reacting under pressure
The Four Phases of Audit Readiness
If you haven’t yet completed the audit readiness assessment, now is the time, as it highlights process gaps before the auditors do.
Phase 1
Year-Round Maintenance
Objective: Build audit-ready habits throughout the year
- Review prior audit notes and board feedback
- Maintain clean books with accrual-based accounting throughout the year
- Keep organized records of contracts, policies, and equity documents as transactions occur
- Document any changes from prior year as they happen (e.g., if capitalization thresholds shift, explain why immediately)
- Perform regular monthly or quarterly balance sheet reconciliations to catch errors early
If you’re short on bandwidth, this is the ideal time to bring in a fractional controller or technical accounting partner.
Phase 2
Pre-Fiscal Year-End (Final 4–6 Weeks)
Objective: Address technical topics early to reduce audit fees and avoid peak-season stress
- Reconcile every material balance sheet account
- Review capitalization policies, lease schedules, and revenue contracts
- If anything changed from the prior year (e.g., capitalization thresholds shifted from 5 years to 3 years for vehicles, or leases were renewed), prepare explanations for why. Auditors will ask, and having the reasoning documented shows rigor and intent, not inconsistency.
- Start preparing documentation and support files
- Identify technical accounting areas (ASC 606, ASC 842, stock comp) needing documentation
- Coordinate with auditors to conduct interim testing and to review the first three quarters early
- Schedule recurring auditor touchpoints to keep communication clear
Not sure where to start? Review “Don’t Know Where to Start With Audit Prep? Ask These 3 Questions First” to assess your current audit readiness and identify the right priorities before building your checklist.
Phase 3
Post-Fiscal-Year End (Weeks 2–4 After Close)
Objective: Final coordination before auditors arrive
- Compile your final PBC list with trial balance and GL
- Ensure all technical memos and supporting documentation are complete and organized
- Verify all balance sheet account reconciliations are finalized with supporting detail
- Verify all supporting documentation is properly supported
By now, your team shouldn’t be “getting ready”; they should be ready.
Phase 4
During Audit
Objective: Stay proactive and collaborative
- Hold weekly calls with auditors to align priorities and address bottlenecks early
- Keep version control clean for audit support
- Track open items in a shared audit tracker
“Don’t fly the plane and rebuild it midair.” Integrate improvements before the audit, not during.
The Real Cost of Waiting
From experience working with startups, CFOs who delay audit prep until Q1 face three predictable consequences:
Higher Audit Fees
Rates spike in busy season, and rework multiplies the cost.
Burned-Out Teams
Already lean teams take on 20+ extra hours a week chasing support.
Missed Funding Milestones
Every delay can erode investor confidence.
Think audit readiness is expensive? Try going through an audit without it.
How Zeroed-In Helps You Start Early to Finish Strong
Zeroed-In’s audit readiness process was built for lean startup finance teams. They:
- Scope risk areas early with a GAAP lens to eliminate last-minute surprises
- Draft audit-ready memos that align with auditor expectations
- Act as translators between your team and the audit firm, cutting confusion and rework
- Provide fractional controllership to bridge staffing gaps through the audit period
The firm has seen hundreds of audits and knows how to make the process painless.
“They were able to take multiple years of our financials that were historically done on a cash basis and convert them to US GAAP, increasing the confidence and accuracy in our numbers. They served more than just typical transactional accountants but rather as a partner during the process.”
Ready to Get Ahead?
Whether your audit is next month or next year, the time to start is now. Schedule a discovery call to review your audit readiness and create a customized action plan.
Schedule Your Readiness Consultation
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