A preaudit is preliminary work conducted by an auditor, prior to the scheduled start date of an audit. The intent of a preaudit is to gather preliminary information about the client, which can be used to highlight any areas that may require special attention during the audit. The findings from the preaudit are then considered when deriving the budget for the audit. For example, if preaudit work finds that a client has large amounts of its inventory held on consignment by third parties, this information can be used to add an audit step to ask for confirmations from the third parties.
A preaudit is designed to involve a relatively small amount of time by the auditor. Consequently, it may only involve sending a standard questionnaire to the client, which may then lead to a phone conversation to expand upon any unusual points raised on the questionnaire. It is also possible that the auditor will travel to the client to interview the controller and others on the management team; in this latter case, the auditor will likely follow a standard list of discussion items.