First-year audits: documents your new auditor will request early

A first-year audit requires more opening work than a recurring engagement. Auditors must obtain comfort over opening equity and significant balances that affect the current year’s income statement, which means reviewing prior-period workpapers when available and testing opening inventory, receivables, and fixed assets when they are not.

Expect requests for articles of incorporation, the chart of accounts, accounting policies, significant contracts, lease schedules, loan agreements, and the prior auditor’s report and management letter. Provide contact details for the predecessor auditor early so communications required by professional standards can proceed without delaying planning.

Companies switching auditors in Japan often underestimate the time needed to reconstruct fixed-asset histories. A clean register with acquisition dates, useful lives, and residual values is one of the most useful gifts a controller can give a new engagement team.