When business owners hear the words “audit” it usually results in two immediate responses. The first is fear that something is wrong within the organization. Did our small business do something wrong? Are we noncompliant with current laws and regulations? Are we going to have to pay a lot of money to fix it? The second is a large Fortune 500 company and audits as something only mega-corporations do.
Accounting audit services can be a valuable tool for any size business. An audit helps ensure that your business operates as it should, that you are able to effectively manage risks, and that your business remains in compliance with regulations and laws that apply to it. They can be performed relatively easily without much cost, and the end result is a better understanding of the way your business operates. The more you know about the way your small business functions, the better your chances of implementing positive changes, maximizing efficiency, and improving employee morale.
What is Auditing?
An audit examines your small business’s financial record to verify they are accurate. An auditor will do this through a systematic review of your transactions. Audit services look at things like your financial statements and accounting records. For small businesses, the results of your audit are not intended to be made public. They are strictly for your use in evaluating your business’s strengths and weaknesses.
Audits can help you spot problems within your business. They can find errors in your numbers, which can help you with decision making. In the long term, a company audit can help you get your small business on track and boost your business bottom line.
When You May Need One
To keep your business healthy, consider conducting an internal audit at the following times.
• Before seeking investment
When you ask investors for money, they are going to expect a full review of your financial statements. It is essential your statements are prepared and 100% accurate or you may lose the potential investor. If they are not accurate, they may even think you were trying to hide something.
• If you notice a mistake in your books
It is common that at the end of a month an account has just a little more or less money than you were expecting. Don’t make the mistake of just writing off the discrepancy. Math is an exact science and your numbers should always add up exactly. If errors are common every month, you may even determine a weakness in one of your processes. Although the discrepancy may seem small, you want to make sure it is not a symptom of a larger problem that could cost your small business a lot of money over time
• If profits or cash flows are declining
Declines in profit or cash flow can usually be attributed to change in market conditions, however, the market is not always the real issue. Your small business may not be paying enough attention to the cost controls or accounts receivables. Even if you have identified an outside cause for the decline in profits or cash flows, you can always look for ways to improve internally to help your small business weather the downturn.
You Can’t Correct Issues You Don’t Know About
Audits are about discovering problems and issues your small business didn’t know about and need attention. As a small business owner, you probably know which areas in your business need work and are most suitable for being audited. Here are some small business functions that benefit from being audited:
• Expenses- it is essential you know where your company is spending money so you can determine if your small business is wasting money.
• Data Quality- including inventory reports, cash balances, and accounts receivable and payable. This data must be current and accurate for these processes to benefit you.
• Compliance- whether with internal, industry, or government regulations, including compliance with tax laws. Regularly monitoring compliance can help tremendously if you become the subject of an outside audit.
• Disaster Recovery- What are your small business’s top priorities after a disaster? You must be prepared with a detailed plan of how to recover operations in the event of a natural disaster, theft, or other catastrophes.
• Spreadsheets- What are our key and critical spreadsheets? How are they controlled? What key decisions do we make based on them? Are employees able to access them or change them? Are the key formulas locked down and are they adequately password-protected?
Limitless Investment and Capital’s Audit Services
An effective and insightful internal audit function provides confidence to leaders that their organization can meet the demands of changing environments. Managing risk, monitoring controls, enhancing security, and improving efficiency and effectiveness of operations are crucial internal audit services. Organizations are increasingly leveraging internal audit as a strategic resource, reaping benefits for the organization such as enhanced efficiency and the ability to move more quickly and take advantage of opportunities. At Limitless Investment & Capital, our financial assurance offerings assist you in meeting contractual or regulatory obligations while helping you create, enhance, and protect value. For more information get in touch today!