External Audit Coordination

External Audit Coordination and preparation is a critical process for companies obligated to conduct financial statement audits or seeking to gain investor trust through transparent financial information. Under the Law of Georgia on Accounting, Reporting and Auditing, audits are mandatory for enterprises of certain sizes (Category I and II, PIEs). This process is often stressful and labor-intensive for company management and accounting departments, as it requires specific knowledge, a deep understanding of International Financial Reporting Standards (IFRS), and effective communication with auditors. Misunderstandings during the audit, improper documentation preparation, or misinterpretation of standards often lead to delays, increased audit fees, and, worst of all, a "qualified" or adverse audit opinion.

The External Audit Coordination service involves engaging a qualified consultant or financial expert who acts as a liaison between the company and the external auditor (e.g., a "Big 4" firm or other audit entities). This specialist "speaks the auditor's language," prepares necessary documentation, answers technical questions, and defends the company's interests when discussing contentious issues. Legal.ge allows you to connect with experienced financial advisors who ensure the audit process runs smoothly, organized, and efficiently.

What does the External Audit Coordination service cover?

This service covers the pre-audit, fieldwork, and concluding stages:

• Pre-audit Assessment: Preliminary review of the financial status and identification of potential issues before auditors arrive.
• PBC (Provided by Client) List Management: Preparing and organizing documentation, spreadsheets, and analyses requested by auditors.
• Financial Statement Preparation: Drafting financial statements (Balance Sheet, P&L, Cash Flow, Statement of Changes in Equity) and explanatory notes according to IFRS or IFRS for SMEs.
• Communication with Auditors: Answering auditor queries, providing samples, and explaining accounting entries.
• Dispute Resolution: Debating accounting methodologies and estimates with auditors, defending the company's position based on standards.
• Agreeing on Adjustments: Reviewing audit adjustments and correctly reflecting them in the system.
• Submission to SARAS: Uploading audited statements to the Service for Accounting, Reporting and Auditing Supervision (SARAS) portal within statutory deadlines.

Common Real-World Scenarios

Assistance from an audit coordinator is particularly valuable in the following cases:

• First-time Audit: A company is undergoing an audit for the first time and lacks experience managing the process. The accounting records are chaotic and need urgent cleanup before the inspection.
• Lack of Qualified Staff: The company has a good operational accountant but lacks a CFO knowledgeable in IFRS who can answer complex audit questions.
• Complex Transactions: Mergers, acquisitions, or the use of complex financial instruments occurred during the year, requiring expert knowledge for proper reflection.
• Risk of Missing Deadlines: The audit is dragging on, the deadline is approaching, and the company cannot keep up with document submission. A coordinator speeds up the process and manages communication.
• Disagreement with Auditor: The auditor demands an adjustment to revenue recognition, significantly reducing the company's profit. The consultant helps the company justify the correctness of its approach.

Legal Framework: Law and Standards

The field of audit and reporting in Georgia is regulated by the Law on Accounting, Reporting and Auditing. The law defines enterprise categories and their obligations (e.g., Category I enterprises must prepare statements in full compliance with IFRS). Supervision is carried out by the Service for Accounting, Reporting and Auditing Supervision (SARAS). The deadline for submitting audited statements is typically October 1st of the year following the reporting period. Violating deadlines or incorrect reporting leads to financial fines and reputational damage.

Step-by-Step Service Process

1. Planning: Assisting in auditor selection (tender), signing the engagement letter, and agreeing on the audit plan.
2. Preparation: Year-end closing, balance verification, gathering documents according to the PBC list.
3. Fieldwork: Hosting auditors, answering their questions, providing documents.
4. Draft Review: Detailed review of the draft audit report, sharing comments.
5. Conclusion: Discussing the Management Letter and signing/submitting the statements.

Why choose a specialist on Legal.ge?

An external audit doesn't have to be a nightmare for a company. Involving a professional coordinator saves management time, reduces audit duration (which often lowers audit fees), and ensures high-quality reporting. Legal.ge gives you access to financial experts with experience working in audit firms who know exactly what auditors need. Prepare your business for inspection without stress.