Audit Readiness Checklist: How Life Science Companies Can Prepare

Audits can be challenging – especially for private and pre-IPO life sciences companies navigating lean finance teams, evolving regulatory requirements, and complex transactions. Without adequate preparation, financial statement audits can quickly become overwhelming.

Life sciences companies often encounter intricate accounting issues, including debt and equity financings, research and development (R&D) costs, revenue recognition, and inventory-related estimates. These areas demand careful attention to maintain accurate reporting and compliance. Yet, finance teams may not anticipate the full scope of auditor requests until the audit is already in progress, resulting in delays and unnecessary frustration.

Without a reliable roadmap for audit readiness, teams may find themselves reacting rather than planning – risking last-minute surprises and avoidable findings. Proactive preparation is essential for a smooth audit process and timely completion of reporting deadlines.

Our Audit Readiness Checklist is the essential first step to prepare with clarity and eliminate the guesswork – so you can approach your audit with confidence.

Your 7-Step Audit Readiness Checklist: Prepare with Confidence

• Step 1: Review key financial statements and ensure they are supported. Each line item in the financial statements should have a schedule supporting the balance, with the appropriate underlying documentation to support the balance (i.e. agreements, invoices, etc.).
• Step 2: Document any complex transactions with memos. Memos should include key information about the transaction, the related accounting guidance under U.S. GAAP and accounting analysis, and your conclusions that support how it was recorded. These complex transactions, if not effectively communicated or identified, typically result in more significant delays due to the time requirements often tied to these transactions.
• Step 3: Document your key internal controls and processes around significant account balances or transactions, including financial statement close processes and how transactions are recorded.
• Step 4: Set aside time to focus on requests from the audit team while they are scheduled to complete testing. Auditors will test the schedules provided, which will require your team to pull evidence such as invoices, vendor or third-party agreements, and bank statements. Maintain an organizational system that works for your finance team and allows for efficient tracking of necessary supporting documentation.
• Step 5: Check in with your auditors if you have any questions about requests to ensure there are limited delays in providing the support needed.
• Step 6: Be transparent. An audit requires two-way communication, whether it be for our required communications, inquiries, or discussing transactions. Overall responsiveness will help the audit be efficient and timely, and being transparent about issues along the way ensures they will be addressed timely.
• Step 7: Know the timeline. Setting out known deadlines, whether as required by your company’s equity investors, lenders, or directors, and aligning your schedule with your auditor’s, will maximize effectiveness and efficiency. In addition to auditors, this includes other related vendors that are involved in reporting like valuation and tax services.

Is Your Business Audit-Ready? Wolf Can Help.

At Wolf, our experienced professionals guide private and pre-IPO life sciences companies through every stage of their audit timeline. We work with pharmaceutical, medical device, and biotech organizations to help you maintain compliance and confidence.

Our audit services include:

PCAOB-Compliant Audits for IPO Preparation and Public Companies

Preparing for an IPO? An audit under Public Company Accounting Oversight Board (PCAOB) standards identifies gaps in meeting public company requirements, allowing for remediation before going public. This proactive approach streamlines the IPO process and ensures compliance with regulatory standards, accounting practices, and internal controls.

Wolf’s Life Sciences team has extensive experience conducting PCAOB audits for both pre-IPO companies and SEC registrants, providing the expertise you need for a smooth transition.

AICPA-Compliant Audits for Private Companies
For private companies with audit requirements but no immediate IPO plans, we offer audits under American Institute of Certified Public Accountants (AICPA) standards to meet your reporting obligations with precision and transparency.

With Wolf’s structured, collaborative approach, you’ll establish clear expectations, maintain consistent communication, and navigate your audit with confidence. Whether preparing for a routine audit or planning to go public, we help you anticipate challenges and achieve a successful outcome.

Contact our team to learn more.