Introduction to Pre-audit

Introduction to Pre-audit

The word “audit” refers to the process of examining the accuracy of financial records of an individual or a business. Usually, an audit is a high-stakes process as a business may have to face severe legal and financial consequences if LHDN found out that it did not pay enough taxes in an audit. Thus, companies should engage professional audit firms in Johor Bahru to carry out financial audits so that they can detect any issues before the authorities knock on their doors.


Pre-audit refers to the first step of the audit process. In this stage, the individual or the company should examine their financial documents to ensure the accuracy of the information before they go through the official audit (Also see Introduction to Audit Strategy). Companies should appoint their own employees or employ an independent firm to help them assess their finances when they conduct the pre-audit process. While pre-audit can refer to a review on the financial statements directly before an official audit, it may also refer to the constant tracing of the company’s finances throughout a year.

Importance of Pre-audit

The most significant benefit of pre-audit is that it provides chances to the companies to detect and correct the accounting mistakes before the authorities catch them. This can probably reduce the possibility of letting the authorities think that the companies commit illegal accounting errors intentionally (Also see Typical Accounting Errors You Want to Avoid). Also, the companies can have an in-depth understanding of their financial position all the time if they implement pre-audit practices throughout the year.

Delegation of Tasks

Delegating tasks is among the crucial steps that a company should take in the pre-audit process. For example, the company should appoint different employees to issue payroll cheques and approve cash and timecards (Also see Procedures in Payroll Audit). It should also assign the tasks of balancing bank statements and depositing cash to different staff. Small businesses can hardly achieve this. However, to prevent misconducts or abuse no matter it is intentional or unintentional, the management should regularly review the finances of the company.

Types of Transactions

As the types of business that conduct the audit and the rules and regulations they should comply with vary, the types of transactions they need to assess in the pre-audit are different. Some standards may require the companies to review the transactions that exceed a certain amount, while others may request them to check transactions from specific categories.