During an audit, a company can identify financial problems, such as funds where they shouldn’t be, abnormal numbers, signs of fraud or theft, etc.
Business audits are evaluations of different aspects of the financial accounting processes used by the company. The purpose of the audit is to ensure that all financial records are in order, that standard accounting procedures are followed, and that all income and expenses are properly documented. Many businesses, as well as non-profit organizations, make use of internal audit procedures, as well as regularly contract with an accounting firm to perform an external audit.
One of the easiest ways to prepare for an audit by an external entity is to make use of an audit checklist.
Along with using a business audit to ensure that all business accounting is complete and in order, the audit may also be requested by a tax agency. Audits of this type may be a random sample and should not necessarily be viewed as an indication that the agency believes something is wrong with information reported on tax returns and other documents. As long as the accounting is in order, the business audit will go smoothly, allowing the situation to be resolved in a short period of time.
Making an audit checklist can help a company prepare for an audit by a third party.
Preparing for a business audit requires some effort, even when accounting records are in order. One of the easiest ways to prepare for an audit by an external entity is to make use of an audit checklist. Such checklists can be found online and easily downloaded. Accounting firms can also provide companies with a generic audit checklist. Additionally, many of the more robust accounting software packages will also include auditing software within the package that can be used to compile the checklist.
With the checklist in hand, it’s a good idea to gather all the relevant paper documents for the business audit. This includes copies of bank statements, receipts, invoices, ledgers, and any other financial correspondence that is relevant to the audit. The idea is to have all the supporting documentation for each line item in the accounting records easily accessible, so that the auditor can quickly go through the process of evaluating the records themselves.
Another important tip for preparing for a business audit has to do with organizing your supporting documentation. Making sure documents are logically organized can save a lot of time. Organizing documents in chronological order often helps make the process of locating the document and verifying the entry in the accounting records very simple and quick.
Above all, it is important to offer full cooperation during the business audit process. This is true whether the process is carried out by an international audit committee, an accounting firm or a tax agency. This will help expedite the completion of the audit, make it easier to implement any necessary changes or corrections, and get the business back to the business of generating revenue.