First-time audits for fast-growing retail and eCommerce businesses

Fast-growing retail and eCommerce businesses can cross the “large proprietary company” thresholds sooner than expected. When that happens, an annual financial report and audit may become mandatory.

A first-time audit is more than validating the numbers. It tests whether your systems, reconciliations, and controls support reliable financial reporting as you scale.

Detailed below is what typically triggers a first-time audit, and the areas auditors focus on most in retail and eCommerce.

Growth in Australia’s retail and eCommerce sectors

Retail continues to grow despite ongoing economic volatility. According to Ragtrader, total retail sales in Australia for the December 2025 quarter hit an all-time record of $160 billion, showing many businesses are managing higher volumes across both physical and online channels.

That momentum is even clearer online. Australia Post and Statista reporting highlights sustained growth in eCommerce since 2020, with online spending now a material part of overall retail performance. The Australia Post 2026 eCommerce Report noted online spending in 2025 was $82.6 billion, up 14 per cent year-on-year.

For fast-growing businesses, the challenge is that scale can outpace finance processes and controls, particularly across revenue and cut-off (ensuring transactions are recorded in the correct accounting period), returns, inventory, and the reliability of system data. These are also the areas auditors tend to focus on first in a first-time audit.

Do you need an audit? The ASIC triggers

You’re a large proprietary company if you meet at least two of the following thresholds (on a consolidated basis) for a financial year:

• Consolidated revenue of $50 million or more
• Consolidated gross assets of $25 million or more at the end of the financial year
• 100 or more employees at the end of the financial year.

If you’re a large proprietary, you generally need to prepare a financial report and a directors’ report, have the financial report audited, and lodged with ASIC (unless relief applies).

Some companies may still require an audit even if they don’t meet the thresholds, for example, certain foreign-controlled structures or where directed by shareholders/ASIC.

What auditors focus on in retail and eCommerce

First-time audits focus on the areas where fast growth puts pressure on reporting, particularly systems and controls, revenue/returns, cut-off, inventory, and completeness of liabilities.

Controls and systems (including access)

Auditors will also explore how data flows from your platform and payment providers into the finance ledger, and whether key reports are complete and reproducible.

Auditors will look for controls that support reliable reporting across:

• Order-to-cash and revenue reporting
• Inventory purchasing, storage, and fulfilment
• Cash receipts and payment processing
• User access in finance and eCommerce platforms.

If controls aren’t documented, expect more year-end testing and a more substantive based audit.

Completeness of liabilities

This often comes down to having a disciplined month-end close (accruals, supplier statements, and cut-off procedures) rather than relying on manual catch-ups after year-end. Common focus areas include:

• AP cut-off and accruals for freight, marketing, logistics
• Returns, refunds, and customer credits
• Supplier rebates and deferred consideration.

Auditors often respond with cut-off testing and supplier reconciliations.

Inventory existence and valuation

Expect questions on stocktakes (including 3PL warehouses), slow-moving analysis, and how markdown decisions are reflected in net realisable value (NRV). Auditors typically focus on:

• Stocktake approach and evidence of existence/condition
• NRV assumptions (markdowns, obsolescence, slow-moving stock)
• Provisioning methodology and consistency.

First-time audits often require more support for provisioning judgments than businesses have historically maintained.

Revenue, cut-off, and returns

Peak periods and shipping/dispatch timing near the balance date are common pressure points, so clear-cut-off rules and returns data are critical. Auditors will test whether revenue is recognised in the right period and whether returns are appropriately provided for, including:

• Dispatch/delivery terms and period-end cut-off
• Returns data, assumptions, and seasonality
• Reliability of system reports and integrations (platform, payments, 3PL).

Where assumptions aren’t documented, or system reports can’t be reconciled, audit testing tends to increase.

How to get audit-ready

While a first-time audit can be challenging, it also provides an opportunity to strengthen financial governance and reporting discipline.

Businesses that invest early in robust financial systems, clear accounting policies, documented internal controls, and proactively engage with auditors will usually see a smoother audit, clearer outcomes for stakeholders, and less disruption to the business.

If you’re likely to meet the thresholds this year, start planning before year-end, because audit readiness work is hardest to do after the balance date.

How BDO can help

If you think you may be approaching the large proprietary thresholds, or you’re planning for a first-time audit, we can help you assess readiness, identify common gaps, provide you with a clear roadmap before planning your year-end audit approach.

Contact BDO’s audit team to discuss your timing, systems, and reporting requirements.