The short version: a statutory audit is a structured, seven-stage process that verifies the accuracy and compliance of a company's financial records — ending with an independent audit report that gives stakeholders confidence in the financial statements.
Step 1 — Planning
The audit usually begins with finding an audit firm to perform the audit for the client. Once engaged, the auditor and the company clarify the scope, fees and objectives of the engagement, and agree the timelines for fieldwork, deliverables and the issue of the report. Good planning is what makes the rest of the audit smooth: it sets expectations, identifies the key risks, and aligns the audit team with the company's calendar.
Step 2 — Document preparation and organisation
The company then prepares and organises the key financial documents the auditor will need, such as:
- Bank statements and bank reconciliations;
- Sales invoices, purchase invoices and receipts;
- Payroll records;
- Tax filings (corporate tax and GST); and
- Draft financial statements.
As part of this stage, accounts are reconciled — bank accounts, payables, receivables and other key balances — to make sure the figures going into the audit are accurate.
Step 3 — Supporting schedules and notes
On top of the source documents, the company prepares detailed supporting schedules for material financial entries — for example:
- Fixed asset registers and depreciation schedules;
- Inventory valuations; and
- Schedules supporting prepayments, accruals and provisions.
Each schedule is accompanied by notes explaining specific items, so that the auditor can quickly tie the financial statements back to the underlying records.
Step 4 — Audit fieldwork and walkthroughs
With the documentation in place, the auditor moves into audit fieldwork. This is where most of the substantive work happens:
- Conducting walkthroughs of key processes (sales, purchases, payroll, financial close);
- Interviewing key personnel to understand controls and judgements;
- Testing transactions and controls in detail, on-site or virtually; and
- Performing analytical procedures and substantive testing on material balances.
Step 5 — Communication and clarifications
Throughout the audit, the audit team communicates with the company to clarify queries and request additional information. Strong communication shortens the audit and reduces last-minute surprises — queries are typically tracked through a structured request list and resolved as fieldwork progresses.
Step 6 — Addressing findings
Any weaknesses or discrepancies identified during fieldwork are discussed with management. The company may be asked to:
- Post audit adjustments to correct misstatements;
- Provide further explanations or supporting evidence; or
- Strengthen internal controls for future periods.
Significant findings are typically summarised in a management letter alongside the audit report.
Step 7 — Audit report and conclusion
After completing the audit procedures, the auditor issues an audit report expressing an independent opinion on the fairness and accuracy of the financial statements. The opinion may be:
- Unqualified (clean) opinion — the financial statements give a true and fair view;
- Qualified opinion — the financial statements are fair, except for specific issues;
- Adverse opinion — the financial statements do not give a true and fair view; or
- Disclaimer of opinion — the auditor was unable to obtain sufficient evidence.
The audit process at a glance
| Step | What happens | Primary owner |
|---|---|---|
| 1. Planning | Appoint the audit firm; agree scope, fees, objectives and timelines. | Audit firm & management |
| 2. Document preparation | Prepare and organise key financial documents; reconcile balances. | Company finance team |
| 3. Supporting schedules | Detailed schedules and notes supporting financial entries. | Company finance team |
| 4. Fieldwork & walkthroughs | Walkthroughs, interviews, tests of transactions and controls. | Audit team |
| 5. Communication | Ongoing dialogue, queries and information requests. | Both |
| 6. Addressing findings | Discuss weaknesses, post adjustments, provide explanations. | Both |
| 7. Audit report | Final report issued with the auditor's independent opinion. | Audit firm |
The bottom line
A well-run audit process ensures compliance with accounting standards and tax laws, enhances financial transparency, and builds stakeholder confidence in the numbers. For founders and finance leaders, the practical takeaway is simple: invest in a strong document trail, reconcile early, prepare good supporting schedules, and treat the audit as a partnership rather than a compliance hurdle. The smoother the inputs, the cleaner the opinion — and the faster you can move on.
To learn more about the audit work we deliver for Singapore SMEs and subsidiaries of listed groups, see our Audit services.