What is Pre-Audit? Definition, Process, and Requirement


The term audit is mainly coined to mirror the incidence of checking financial records of a business or individuals for accuracy. In this regard, there are main steps taken into account, predominantly on the grounds of ensuring that a proper trajectory is formed to get proper clarity about the underlying process that is supposed to be undertaken in this regard.

The first step that is taken in order to design and implement the audit process is referred to as Pre-Audit.

Often companies also use pre-auditing to define, describe, and justify the review, which directly precedes an official audit and the underlying continuous process that can help monitor finances across the longevity of the year.

Pre-Audit Process

Pre-Audit can be defined as the first step that is taken during the process of the audit. During the pre-audit process, it can be seen that the company or the individual’s financial documents are duly examined to ensure that all the information that is presented in these documents is correct before filing in for an official audit.

The pre-audit process can also be carried out by the employees of the company that is being audited. Alternatively, the company can also hire independent auditors to conduct a pre-audit to determine the overall accuracy of the financial statements that will subsequently be used for the audit process.

As a matter of fact, an important aspect that should be considered when it comes to pre-audit is that when the employees of the particular company conduct the pre-audit, it becomes rudimentary to ensure that there is sufficient segregation of duties present within the organization.

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This means that the payroll department cannot choose to pre-audit its own financial statements. They should ideally conduct a pre-audit of some other department that is unrelated to that matter.

Additionally, the types of transactions and expenses that should be catered to in the pre-audit should mainly include transactions that lie within the materiality threshold and greatly impact the audit process’s outcome.

Hence, in this regard, it is also increasingly important to realize the notion that the pre-audit process should be designed depending on the types of transactions that are involved within the department (or the organization) and the overall impact they can have on the outcome of the audit process.

Hence, the pre-audit process is carefully designed to ensure that all subsequent preparations for the audit have been carried out. If there is anything questionable, it can be fixed before it is pointed out during the final audit.

The Need to Conduct Pre-Audit

The main rationale presented when it comes to companies conducting a pre-audit lie in ensuring that companies can identify and fix any errors that might lie on the financial statements before they are subsequently pointed out, either by the final auditor or any other tax agency.

This increases the overall probability based on which it can be safely assumed that the final auditor does not develop uncalled for skepticism about intentional misstatements, as well as a fraud within the company.

Therefore, the underlying premise behind conducting a pre-audit is mainly twofold. Firstly, it ensures that the company can identify any issues and problems way beforehand.

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This is to ensure that the overall audit process is carried out smoothly, without any further delay. Additionally, it can also be seen that pre-audit ensures that considerable time is saved as a result of the identification of mistakes in the first go.


Therefore, there is no doubt that pre-audit can be considered an increasingly important part of the audit process, essentially because it acts as a preliminary audit, which highlights and points out inherent errors in the overall audit process.

Hence, in this regard, it becomes increasingly important to account for the fact that pre-audit helps companies to fix identifiable errors before they are pointed out by authorities or the auditors in charge.

Regardless of the fact that pre-audit is not always complied in law, it is important to realize the fact that it acts a significant aid for the company, because of the reason that it helps to streamline the financial information and documents, which can subsequently help in conducting the audit process in a much more organized manner.