“Audits” are usually considered a monumental undertaking for small and medium business (SMBs) owners. However, audits plays a critical role in helping to evaluate the effectiveness of a company’s internal controls, availability of reliable financial reporting, fraud prevention, utilization of its assets and reduction in its cost of capital. Audits also ensure that the business is meeting the expectations of their stakeholders and meeting regulatory requirements of the industry.
Below are the best practices that can help audits flow smoothly, while delivering lasting benefits which will enhance business performance.
- 1. Keep accurate & up-to-date records
Poor bookkeeping is a common problem among SMB owners. Keeping accurate records from the beginning of the fiscal year can save an SMB owner both time and money in ensuring compliance with audit needs, thereby allowing him to focus on other strategic activities of the business.
- 2. All needed information should be compiled in an organized way
Audits flow smoothly when all the information auditors have requested is assembled before they arrive. The information can be organized in an online folder or in a physical form. This reduces the numerous interruptions auditors would have to impose on the staff when looking for the needed information.
3. Perform reconciliations monthly or quarterly throughout the year
Completing reconciliations on a monthly or quarterly basis helps in identifying, investigating and resolving any outstanding items in a timely manner. Waiting until year-end to resolve issues prior to the audit makes it very difficult to reconcile so many items and it may take a lot of time to go back and research and resolve them – which, again, is time that could be better focused on more strategic areas of the business.
- 4. Conduct a self-review
Plan some time to review schedules and work papers in advance of the audit request or arrival. This helps to ensure that accounts balance and tie out before having to show and prove that to the auditor. Also plan to take some time to assess the overall financial statements and make sure that all needed notes and disclosures are documented and available. This will help to make sure the audit flows as smoothly and as quickly as possible.
The above ways will allow SMB owners to be prepared for the arrival of their auditors and will ensure a successful and timely completion of their audit.
Quatrro has a proven history of helping its clients face their auditors with confidence. If you are a SMB and would like professional advice on how to streamline your financial processes and take the dread out of your next audit