Manufacturing audit checklist: How to prepare for your year-end audit

If you’re like most manufacturing MDs we work with, you’re already spinning enough plates. One minute it’s a broken forklift, the next it’s a delivery that’s gone out late, a payroll query, or a last-minute request from the bank.

So, when someone mentions the external audit, it’s no surprise if your first thought is: not now!

That’s exactly why Craig Burton, Audit Partner has pulled together this pre-year-end checklist, built specifically for manufacturers. Over the years, Craig has led external audits for manufacturing & engineering firms including food producers, electronic component manufacturers, and metal fabricators. He knows where audits stall, what gets flagged in audit findings and what makes life easier for everyone involved.

A bit of preparation now will save you a mountain of time later. No last-minute chasing. No being pulled off the shop floor to hunt down paperwork and no delays that hold up decisions from your bank, shareholders, or future investors.

Why audit readiness matters – and how it helps your manufacturing company

Currently manufacturing companies that meet two of the following three criteria are required to have a statutory audit:

• An annual turnover of over £10.2 million
• Total assets of over £5.1 million
• More than 50 employees on average

The turnover and total assets thresholds have been increased by approximately 50% for periods commencing on or after 6 April 2025, so if your company has a 30 April 2026 year end, the thresholds for an audit are two out of three of the following:

• An annual turnover of over £15 million
• Total assets of over £7.5 million
• More than 50 employees on average

If your business falls into this bracket, you’ll already know an audit is part of the routine. So, if you have to do it, it’s worth doing properly.

A well-prepared audit brings real business benefits:

• Saves time and reduces last-minute chasing
• Minimises disruption to production and day-to-day operations
• Gives lenders, shareholders, and investors more confidence
• Supports grant applications and R&D claims
• Protects against HMRC scrutiny and fraud risk
• Helps with succession or exit planning
• Improves visibility over margins, waste, and inefficiencies
• Strengthens your hand in funding or sale conversations

A clean audit shows your business is in good shape and that your numbers can be trusted.

What financial records are required for a manufacturing audit?

Listed below are the core financial records you’ll need to prepare before an independent external audit. If these are tidy, everything else moves faster.

• Final trial balance and general ledger
• A detailed stock and work in progress (WIP) listing – see further details below
• Trade debtors ledger and list of prepayments and other debtors, reconciled to the trial balance
• Trade creditors ledger and list of accruals and other creditors, reconciled to the trial balance
• Bank reconciliations for all accounts (including any loans or credit cards)
• VAT, PAYE, and pension reconciliations
• Fixed asset register updated for any new machinery, upgrades, or disposals
• Depreciation entries clearly recorded
• Year-end journals for prepayments, accruals, or stock movements
• List of related party transactions (including director or family connections)

Why this matters: If this foundation isn’t right, we spend time untangling it instead of auditing it. That means more questions, more disruption, and a longer audit process than anyone wants.

What stock and WIP records do manufacturers need for audit?

Stock and work-in-progress are often the trickiest part of any manufacturing audit. Especially when the stocktake is squeezed in between jobs or WIP is costed in a way that finance can’t easily track. Here is what you should have prepared ahead of an audit.

• Full year-end stocktakes completed and documented
• Stock valued consistently, with slow-moving or obsolete stock written down
• WIP broken down by job, batch, or project, with costings
• Overheads properly absorbed and explained
• System balances reconciled to the trial balance

These records often highlight gaps in manufacturing processes, especially when costing data, material usage, or timing differences are unclear.

Craig’s tip: If your production software doesn’t match your accounts, flag it early. We’ll need to understand the difference and it’s always better to raise it before we ask.

What sales and debtor records should be ready for audit?

We’ll be looking at how and when you recognise revenue, especially near year-end. This is a common area where numbers get questioned, even when they look right on paper.

• Sales ledger reconciled to the trial balance
• Invoices matched with delivery notes or job completion records
• Bad debt provision reviewed with clear backing
• Credit notes issued after year-end flagged and explained
• Cash received after year-end linked to outstanding invoices

Why this matters: We’re not just checking totals. We’re checking that the timing is right and that the numbers reflect reality.

What capital expenditure documents are needed in a manufacturing audit?

Manufacturers are typically asset heavy businesses. If you’ve invested in new machinery, scrapped old kit, or brought in leased equipment, we’ll need to see clear records.

• Fixed asset register showing additions, disposals, and depreciation
• Invoices for new equipment or tooling
• Asset finance or hire purchase agreements properly documented
• Records of anything scrapped, upgraded, or sold
• Grant-funded or part-funded machinery clearly identified

Craig’s tip: If you’ve got machinery still being installed or not yet in use, let us know how it’s been treated in your accounts.

What purchase and creditor information is required for audit?

Incorrect timing of purchase invoices is one of the most common audit issues in manufacturing. Especially where suppliers invoice late or goods arrive close to year-end. Here is what you need to consider:

• Purchase ledger reconciled to the trial balance
• Year-end accruals and provisions listed with explanations
• Aged creditors report reviewed, with old or disputed balances noted
• Invoices received after year-end reviewed for correct cut-off
• Any changes to supplier terms or finance agreements highlighted

Why this matters: If costs fall into the wrong period, your profit figures can be skewed. That can raise questions from lenders, boards, or potential buyers, especially when margin performance is under the spotlight.

What payroll records should be prepared for a manufacturing audit?

Payroll often looks simple until you get into the detail. Director bonuses, leavers, or late adjustments can all affect how the numbers add up. You’ll need to have:

• Year-end payroll summary with gross pay, PAYE, and pensions
• Clear breakdown of director pay and bonuses
• Real Time Information file submissions available
• Settlement terms for any senior leavers
• Notes on any major staff changes or pay increases

What legal and contract documents should manufacturers prepare for audit?

Often overlooked, but when these come up, they can slow the audit right down, especially if contracts can’t be found or haven’t been updated.

• Board minutes for the year and post year-end
• Copies of major supplier or customer contracts
• Notes on any legal matters or disputes
• Updated banking or loan agreements
• Details of changes to directors, shareholders, or business structure

Craig Burton: audit support from someone who knows manufacturing

Craig Burton is an Audit Partner at Hawsons. Craig has spent all his career in audit and has a vast amount of experience working with engineering, fabrication, food, electronics and plastics businesses to deliver clear, disruption-free audits.

“We’ve seen the same issues crop up time and again. Stock and WIP that’s not valued clearly. Invoices posted to the wrong period. Asset registers that don’t match the plant on the floor. This list is built on real-world experience and not just theory.”

One last thought – why it’s worth getting ahead

No one enjoys audit prep. But a bit of forward planning now means fewer questions later, less disruption to your team, and a better result for your business.

Whether you want to reduce hassle, prepare for funding, or just make sure things are in order, this checklist will help.

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