How to carry out a company audit
Audits are vital for businesses both large and small. In many countries, it’s a legal or regulatory requirement to carry out a regular audit – and even if it’s not, it’s still wise to do so in order to acquire deep and detailed knowledge on how your company is performing. The benefits of an audit are diverse, and they range from developing a full understanding of your firm’s financial history to identifying spots where problems may arise in the future. This article will look over some of the major steps involved in carrying out a company audit and identify some of the problems and issues to look out for.
Audits: the process
In order to start the audit process, you will need to alert everyone to the fact that it’s about to happen and that they need to prepare. That way, team members can start to compile what they need. The accounts department may need to get company bank statements and invoices together, for example, while the legal team can take old contracts out of their files and get them organized. At this stage, it may be wise to book the assistance of specialist auditors who can help you run the process from start to finish. They – or whoever is carrying out the audit – will need unfettered access to all of the key documents, and arrangements should be made for that to happen.
During the audit, you or the auditor will need to be on the lookout for certain key problems. Some of the documents presented may, for example, contradict one another, and that could ring alarm bells. A thorough search of all accounts and documentation will usually be enough to explain problems like that, but if not, then it could indicate a more serious problem that requires investigation.
You and your auditor should also have in mind the final audit report, which will need to be presented once the audit is over. It’s often a good idea to draft this as you go along, changing certain aspects of it if necessary. Once completed, the report can be presented to senior staff, shareholders and even potential future investors as evidence that the company is proactive about efficiency and standards.
Broadening your audit’s scope
Audits don’t have to be merely financial, however. They can also be a good opportunity to work out how the operational and logistical aspects of your company are performing, especially when it comes to resource allocation and staff time. Speaking to managers at all levels of your team is a great way to find this out. Ask them questions, such as whether or not they feel like they have what they need or how resource allocation in their department could be improved. Because your people will be in a reflective mindset due to the ongoing audit, they may be more likely to speak up.
Finding out historic data
In many ways, this is one of the most difficult aspects of carrying out a company audit. In order to properly understand how your firm reached its current financial situation (whether good or bad), you may need to access quite old information. If your accounts department has been diligent in keeping records, then this may be easy – but if not, there could be a lot of research to do.
Often one of the most difficult issues is accounting for the funds that were used to get the business off the ground years ago, because this usually happened before a proper accountancy function was put into place. People who used credit cards to kick start their business back in the day may have had Barclays PPI, and if this applies to you then it is possible that you are owed money. All of these sorts of considerations will need to be taken into account when carrying out a full company audit, and as a result it’s often wise to get some professional assistance to help you achieve this just to make sure your company is not owed any historic cash.
Running an audit may seem like a hassle, but it’s often worth it in the end. From giving you the information, you need to take key decisions about your company’s future to ensuring that you have received all monies you’re owed, investing time and resources into an audit can pay real dividends. And by using it as an opportunity to find out from your staff what they need to do their jobs even better than they do currently, you can turn it into a strategic learning session as well.