Audit Readiness for UK Scaleups: A Practical Playbook

Fast growth breaks messy finance. Not because your team is careless, but because volume exposes every weak join: half-built processes, inconsistent approvals, missing contracts, spreadsheets no one owns, and month-ends that “mostly” reconcile.

That’s why audit readiness belongs in the same category as product reliability and customer trust. In the UK, it’s also about timing: audit thresholds are changing, and from 1 January 2026, lease accounting changes will push some businesses over the line earlier than they expected.

This post is part of our Governance, Regulation & Public Trust series. The thread running through the series is simple: transparent, well-governed companies earn trust faster—from customers, investors, lenders, partners, and regulators. An external audit can feel like a hurdle, but handled properly it becomes a credibility asset.

The 2026 audit shift: why fast-growing firms get caught out

If you wait until you “need” an audit to behave like an auditable business, you’ll pay for it in stress, fees, and distraction. The moment you’re scaling, you should assume external scrutiny is coming—because it is.

For financial years commencing on or after 6 April 2025, a UK business generally requires an audit when it meets two of the three criteria for two consecutive years:

• Turnover greater than £15 million
• Total assets greater than £7.5 million
• 50 or more employees on average

Two extra realities matter for scaleups:

1. Some businesses require an audit regardless of size criteria, and shareholders owning at least 10% can request one.
2. Lease accounting changes from 1 January 2026 mean most commercial leases will be capitalised on the balance sheet, increasing gross assets and potentially tipping you over the audit threshold earlier than your forecast assumed.

This is governance in action: regulations change, and businesses that keep pace look more trustworthy than the ones that scramble.

What the lease change means in plain English

Answer first: If you have multi-year property leases, your balance sheet may “inflate” even though your cash position hasn’t changed.

When leases are recognised on-balance sheet, auditors will expect you to:

• identify all leases (including embedded lease components in contracts)
• calculate right-of-use assets and lease liabilities correctly
• document assumptions (discount rates, terms, break clauses)

If your finance team is already stretched, this is where audit preparation stops being theoretical and becomes operational.

Treat your first audit like a growth milestone, not a punishment

A good audit isn’t just compliance—it’s an external stress test of how your company runs. Most companies miss the upside because they approach audit as a once-a-year fire drill.

When you’re raising capital, pitching enterprise customers, or exploring partnerships, your stakeholders are quietly asking:

• Are the numbers real?
• Are controls tight enough to prevent errors or fraud?
• Can this team scale without everything falling apart?

An audit won’t answer every question, but it sends a strong signal: your financial reporting can withstand independent scrutiny. In marketing terms, it’s brand credibility built with evidence.

How to choose an auditor when you’re scaling quickly

Answer first: Choose an auditor who can challenge you and still communicate like a human.

Yes, technical expertise matters. But for fast-growing businesses, the best auditors also:

• learn your revenue model (subscriptions, usage-based billing, services, marketplace fees)
• understand your growth plans (new markets, acquisitions, financing)
• flag risks early (revenue recognition, cut-off, leases, stock, provisions)
• run a clean process with clear deadlines and a “prepared by client” (PBC) list

I’m opinionated here: if the auditor can’t explain an issue simply, they’ll slow your team down and you’ll spend the audit translating.

A practical audit readiness checklist (that actually reduces pain)

Answer first: Audit prep is 80% discipline—timely reconciliations, traceable documents, and clear ownership.

Below is a scaleup-friendly checklist you can implement even with a small finance team.

1) Get your core records audit-shaped

Your auditors will want your numbers to be reproducible.

• Keep your general ledger tidy with clear descriptions and coding
• Ensure income, expenses, assets, and liabilities are up to date
• Lock down version control for spreadsheets used in reporting (or retire them)

Practical tip: If you can’t re-run a report two weeks later and get the same result, you don’t have reporting—you have a one-off.

2) Build a “supporting evidence” habit

Audits move at the speed of evidence. Missing documents create delays, extra fees, and stressed teams.

Have these ready and retrievable:

• bank statements and loan agreements
• sales invoices, credit notes, and customer contracts
• supplier invoices and key vendor contracts
• payroll summaries and headcount reporting
• board minutes for major decisions (financing, acquisitions, share issues)

Governance angle: well-kept records aren’t bureaucracy; they’re how you demonstrate accountability.

3) Reconcile monthly—every balance sheet account

This is the single highest-return habit in audit readiness.

Perform monthly reconciliations for:

• bank
• debtors (accounts receivable)
• creditors (accounts payable)
• fixed assets
• stock
• VAT and PAYE balances
• accruals and prepayments

Then document:

• what reconciling items are
• why they exist
• what clears them (and by when)

If you only reconcile at year-end, you’re asking your team to debug 12 months of activity in one month.

4) Plan stock counts and operational evidence

If you hold inventory, year-end stock count planning is not optional.

• schedule counts early
• define counting procedures (who counts, who reviews)
• ensure auditors can attend for sample testing

For businesses with distributed inventory or 3PL warehouses, document how you ensure accuracy. Auditors will ask.

5) Ask for the PBC list early and run a timetable

Answer first: The best audit is the one with a clear calendar.

Request the auditor’s Prepared By Client (PBC) list early, then convert it into a timeline with owners and internal deadlines.

• Appoint an internal audit lead (even if it’s not the FD)
• Brief non-finance stakeholders (Sales Ops, Ops, HR, IT) on what’s needed
• Agree milestones for:
  • when requests arrive
  • when you’ll respond
  • when fieldwork happens
  • when follow-up testing closes

Small-team hack: build in a gap between sample selection and testing so you’re not scrambling for documents under pressure.

The “surprise killers”: issues that blow up audits for scaleups

Answer first: Most audit pain comes from a handful of repeat offenders—revenue, estimates, controls, and sudden change.

Revenue recognition and cut-off (especially for SaaS and services)

Auditors focus heavily on revenue because it’s the most common area for misstatement.

Get clear on:

• when revenue is earned (delivery, usage, time)
• how you handle implementation fees and professional services
• how you treat discounts, refunds, and credits
• cut-off procedures at month-end and year-end

If your billing model changed mid-year (common in high-growth), document it and discuss it early.

Judgements and estimates: provisions, bad debt, stock

Auditors don’t mind estimates. They mind undocumented estimates.

Have a short memo (one page is fine) covering:

• bad debt provision methodology (ageing, credit notes, collection history)
• stock provisions (obsolete or slow-moving rules)
• key assumptions and why they’re reasonable

A sentence I like: “If you can’t explain the estimate, you can’t defend the estimate.”

Controls and access: who can approve, who can pay, who can change data

You don’t need a corporate bureaucracy, but you do need basic control hygiene:

• dual approval for payments above a threshold
• separation between raising suppliers and paying them (where possible)
• clear access controls for banking and accounting systems
• an internal review step for reconciliations and key journals

This is also where public trust comes in. Good controls reduce fraud risk and show you operate responsibly.

“Big changes” mid-year: tell the auditor early

New financing, expansion, acquisitions, new revenue streams, adverse events—these affect audit risk and timing.

If you keep auditors in the loop, they can plan properly. If you surprise them at fieldwork, you’ll get delays and deeper (more expensive) testing.

After the audit: turn findings into a credibility roadmap

Answer first: The real value of audit is what you fix afterwards.

Auditors will typically highlight control weaknesses and recommend improvements. For scaleups, treat this as a prioritised roadmap:

• tighten contract management (signed terms, renewals, obligations)
• strengthen debtor follow-up (reduce aged receivables)
• formalise approval workflows
• improve stock procedures and documentation
• standardise month-end close and reconciliation reviews

If you’re building a brand in the UK market—especially if you sell to enterprise or the public sector—governance maturity becomes part of your go-to-market story. Buyers often won’t say “show me your controls,” but they will assess whether you feel reliable.

A stance worth taking: audit readiness is a marketing asset you earn, not a slogan you claim.

What to do this month (a realistic starter plan)

Answer first: Start with consistency, then add sophistication.

If you want momentum without overwhelming your team, do these three things in the next 30 days:

1. Implement monthly balance sheet reconciliations with clear owners and review sign-off.
2. Create a single evidence folder structure (banking, revenue, payroll, contracts, cap table, leases) with naming conventions.
3. Write down your top five accounting judgements (revenue timing, provisions, leases, capitalisation policy, stock) in plain English.

That’s not busywork. It’s how you make future audits faster, cheaper, and less disruptive.

Audit thresholds and lease accounting rules are shifting as we head into 2026, and fast-growing businesses will feel it first. The companies that handle this well don’t just “pass an audit”—they build a reputation for being the kind of organisation people can trust.

So here’s the forward-looking question for your leadership team: as scrutiny increases—from investors, customers, and regulators—will your finance function prove your story, or accidentally undermine it?