Conducting A Business Audit

Conducting A Business Audit

What is a business audit? A business audit consists of several steps. These include an assessment of your company’s internal control system and practices, examining the effectiveness of your accounting procedures and system, checking if your business is compliant with applicable laws and regulations, checking the performance of your tax return, and finally, assessing your business’s performance based on the results of these audits.

Essentially, a business audit involves a thorough examination of your business’ internal control system, its financial documents and supporting paperwork, and the tax records of your business.

How Are These Audits Normally Carried Out?

Generally, small business owners prefer to do their own auditing. However, it can be quite tedious and tiring work. Business owners need not worry though as there are professionals who specialize in conducting tax audits. These professionals are generally hired by large companies and highly qualified accountants who are in charge of the entire auditing process.

Small business audit typically focuses on four areas: systems, controls, performance, and structure. The scope of work depends on the size and type of the business. There are also some small business audit companies that conduct audits on medium-sized and large enterprises. In general, the objective of an audit is to expose inadequacies or defects in your accounting system, systems, and policies. Also, an external auditor can highlight areas where your business may have fallen short in terms of performance compared to how it was previously treated.

Keeping Financial Information Up To Date And Fresh

An audit of your business’s accounting system helps ensure that your financial information is secure and updated. This is because financial statements are prepared after taking into consideration a wide range of assumptions regarding the operation of the business. Even the smallest mistakes in the preparation of business reports can have a significant impact on your business’s financial results. It is for these reasons that you must conduct regular business reviews with auditors.

One of the main tasks of small business audit involves reviewing your business tax records. These records are critical for auditors to determine which tax strategies are most beneficial for your business. The tax records contain information such as profit and loss statements, purchases and sales statements, and a host of other financial information. If these tax records are found to be incomplete or outdated, your business may be liable for tax penalties or excessive penalties. Thus, you need to make sure that your tax records are accurate and up-to-date at all times.

Choosing An Auditor

When selecting an external auditor, it is important to check their experience and qualifications. There are many professional organizations that set up accreditation boards for accountants. These organizations generally accepted accounting principles as the minimum criteria for an external auditor to apply. You may also want to consider the quality of reports that they will produce during your review. Your selected external auditor should be able to produce a detailed, comprehensive report that meets your standards.

Benefits As A Result Of An Audit

There are clearly a range of different kinds of benefits that can come about as a result of an audit taking place.

Some of the clearest and most obvious benefits are as follows:

  • Improved understanding or business processes
  • Flaws and areas for improvement clearly highlighted for future changes and improvements
  • Audits are important as they provide an official record and can be used by other businesses and organisations as a reference point
  • Having an audit undertaken may also help to ensure that a better understanding is gained on wider business issues