Audit readiness prepares financial firms for regulatory exams and third-party reviews. Taft assesses documentation and controls to confirm alignment and to minimise disruption.
Why audit readiness matters
Regulators such as the SEC and FINRA conduct examinations to verify compliance; preparedness reduces the risk of findings and builds trust with the examiner.
Best practices
- Documentation: maintain comprehensive records of policies, decisions and transactions.
- Mock audits: simulate reviews to identify weaknesses before the regulator does.
- Remediation: develop action plans for findings, with owners and dates.
- Control testing: evaluate effectiveness at least annually.
| Practice | Benefit | Method |
|---|---|---|
| Mock audits | Proactive fixes | Internal or independent simulations |
| Remediation | Swift resolution | Tracked action plans |
Preparation steps
- Review the firm’s risk posture.
- Gather evidence.
- Train teams for interviews and requests.
- Engage liaisons with the examiner.
- Follow up after the audit.
See ExamReady, Taft’s mock regulatory examination, or talk to an expert.
Questions
What triggers an audit?
Routine cycles, risk-based selection by the regulator, a licence event, or a specific concern such as a complaint or a market event.
How long does preparation take?
Three to six months is a realistic window for a firm that has not been examined before; a firm that keeps its evidence current can be ready in weeks.
Taft does not provide legal advice. Content is for informational purposes only and subject to regulatory guidance.