What to Expect from Your First Financial Statement Audit (Nigerian Edition)

As your business grows, so does the need for financial transparency. Whether you run a construction firm in Abuja, a manufacturing company in Aba, or a nonprofit in Lagos, undergoing a financial statement audit may soon become a necessary step. But if it's your first time, the process can seem daunting.

Here’s what Nigerian businesses need to know when preparing for their first audit.

Financial Statement Audit

What Is a Financial Statement Audit?

A financial statement audit is an independent examination of your company's financial records by a qualified auditor or firm. The goal is to ensure your records present a true and fair view of your financial position in line with accounting standards, such as IFRS or NASB.

In Nigeria, audits are often required by:

• Regulatory bodies like the Corporate Affairs Commission (CAC) and Federal Inland Revenue Service (FIRS)

• Potential investors or banks

• NGOs receiving international grants

• Large customers demanding financial transparency

What the Auditor Will Look For

Auditors will typically:

• Review your accounting processes

• Verify supporting documentation for transactions

• Confirm cash balances, debtors, creditors, and inventory

• Test internal controls for weaknesses

• Evaluate compliance with tax and regulatory frameworks

This helps ensure your financial statements are accurate and reliable.

How to Prepare

1. Get Your Records in Order Ensure your accounting books are updated, receipts and invoices are accessible, and financial statements are compiled.

2. Assign an Internal Contact Designate a team member who understands your accounts to liaise with the auditors.

3. Be Transparent Disclose all bank accounts, loans, assets, and liabilities. Trying to hide things may delay the audit or raise red flags.

4. Review Internal Controls Weak internal controls often lead to audit issues. Make sure your approval processes, segregation of duties, and record-keeping are tight.

Common Pitfalls in Nigerian Businesses

• Inadequate documentation: Receipts and invoices not properly filed

• Cash-based systems: Lack of digital records or accounting software

• Non-compliance with tax laws: Errors in VAT, WHT, or PAYE filings

• Personal expenses recorded as business expenses

Avoiding these early can save time and cost during the audit process.

Benefits of an Audit

Beyond compliance, audits offer real advantages:

• Improved financial discipline

• Better access to funding and investment

• Enhanced trust with partners and clients

• Insight into operational inefficiencies

In Nigeria's increasingly competitive market, being audit-ready sets your business apart.

Final Thoughts

The first audit might feel like a challenge, but with proper preparation, it can be a valuable experience. Consider partnering with a reputable Nigerian accounting firm that understands your industry, regulatory landscape, and operational realities.

If you’re not sure where to start, let us guide you through the audit journey—seamlessly and professionally.