When Should You Engage an External Auditor in the PH?

When Should You Engage an External Auditor in the Philippines?

If your company needs audited financial statements, the most important decision you will make about that audit is not who signs it. It is when you call them.

Wait until after your financial year closes and there is one thing your auditor cannot go back and do: watch your inventory get counted at year-end. That count happens once. Once it has passed without your auditor there, they are working around what was not observed rather than with what was — and that means more procedures, more questions, and a longer engagement.

This article uses a 31 December year-end throughout, because most Philippine companies use one. If your fiscal year ends on another date, work backward from your own year-end — the timing principle is identical.

Quick Answer: When should a Philippine company engage its external auditor?

Engage your external auditor before your fiscal year closes, not after — early enough for them to complete acceptance and independence procedures, plan the audit, and attend your year-end inventory count where inventory is material.

Auditors need lead time for client acceptance, independence checks, and the engagement letter before any fieldwork can begin
Where inventory is material to your financial statements, your auditor generally needs to attend the physical count to obtain evidence about what exists and what condition it is in
That count cannot be recreated afterward, and a late engagement is not a reason the requirement is waived
Filing deadlines with the SEC and BIR are set independently of when your audit starts
As a practical guide, UNA recommends starting the conversation three to six months before year-end. That is a planning recommendation, not a regulatory deadline

Does Your Company Need Audited Financial Statements?

Whether an audit is required depends on your company’s SEC classification and your figures against separate SEC and BIR thresholds — two different tests that measure different things. If you are not certain the requirement applies to you, start with our guide, Who Needs an External Audit in the Philippines?, then come back to the timing question below.

Why Waiting Until After Year-End Makes the Audit Harder

An external audit is not a single visit. It involves client acceptance, an engagement letter, independence checks, a risk assessment, and a plan for which balances and transactions get tested. That work is meant to happen before your books close — not once your accountant hands over year-end figures in February.

If your financial year ends 31 December, the conversation should start well before December.

The Count You Cannot Redo

Where inventory is material to your financial statements, your auditor generally needs to attend the physical count. Attending is how they obtain evidence about what actually exists and what condition it is in — something no amount of paperwork produced afterward fully replaces.

Engage in January, after the count already happened without them, and your auditor has to fall back on other approaches. They can work from a count taken on a different date and roll the balances forward or backward. That is a recognised procedure, not a failure — but it takes more time, more testing, and depends on your inventory controls being strong enough to support it.

Fix: If inventory is material to your business, tell your auditor your planned count date as soon as it is set — and appoint them before it is scheduled, not after.

What a Late Start Does to Your Timeline

Filing deadlines are set independently of when your audit begins. An auditor engaged in January works toward the same submission date as one engaged in September, with far less runway.

A late start gives both your finance team and the audit team less time to resolve questions and complete required procedures before the filing deadline. Fieldwork gets scheduled alongside every other client working to the same date. Review cycles shorten. Your own team is asked to produce reconciliations and supporting schedules on a compressed timeline instead of a manageable one.

What If You Have Already Passed Year-End Without an Auditor?

Quick Answer: Can you still get audited if year-end has passed?

Yes. You can still engage an external auditor after year-end, but do it as soon as possible and tell them about any year-end procedures, such as an inventory count, that have already taken place.

Tell the auditor when and how the inventory count was conducted, and who supervised it
Provide the count sheets, inventory records, and any documentation produced at the time
Explain any significant transactions that fell close to year-end
Respond promptly when the auditor asks for alternative evidence
Agree a realistic timetable for completing the audit against your filing deadline

One point worth being clear about: missing the year-end count does not automatically mean your financial statements will carry a qualified opinion. Your auditor will determine whether sufficient evidence can be obtained through other procedures. A qualification is the outcome only where it cannot.

What does not help is compressing everything into the final weeks before a deadline, or leaving the auditor to discover on their own what was and was not observed. Engage, disclose plainly, and let them scope the work.

A Realistic Engagement Timeline

A general planning guide — adjust for your fiscal year-end and the complexity of your business.

3–6 months before year-end: Start the conversation. Confirm engagement terms, scope, and timeline
1–2 months before year-end: Your auditor completes planning and risk assessment, and confirms the inventory count date if inventory is material
At year-end: Your auditor attends the count. Your team finalises cut-off procedures
1–2 months after year-end: Fieldwork and testing. Your team prepares reconciliations and schedules as requested
Before your filing deadline: Your auditor issues the opinion and you file

The Bottom Line

The cost of engaging your auditor late is not only measured in fees. It is measured in what your auditor could not observe, could not test on time, and had to work around instead. None of that is fixable once your year-end has passed. The timing, though, is entirely within your control — whether your financial year has three months left or three weeks.

Planning Your External Audit? Start Before Year-End.

If your company requires audited financial statements, engaging your external auditor early gives both your management team and the auditor more time to plan the engagement properly.

UNA Tax and Accounting Services provides external audit services in the Philippines for businesses that require independent audited financial statements.

If your fiscal year-end is approaching and you have not yet appointed your external auditor, talk to UNA about your audit requirements and expected timeline.

Talk to UNA About Your External Audit

Related Insights

You might also find these helpful: