Audits can be time consuming and costly events for organisations and businesses to manage, especially those in an entrepreneurial position. However, preparing and planning for the audit can save you an extensive amount of time and money.
Many business owners end up making a plethora of errors in their audit statements. Most states have strict rules and regulations when it comes to audits for businesses and corporate entities, and not adhering to these statutes can have serious repercussions.
In this article, we mention some of the most common mistakes made by business owners in audits. We also take a look at just what you can do to ensure the best accounting practices during and after the audit.
While audits can be generally disruptive at times, small business accountants can streamline their preparations through the following tips:
Businesses today can get ready for and started with the auditing process in a number of different ways. The first way to be organised for the process is by setting a timeline that assists you in following the right path to success. It is good to move one step at a time, which is why managers are recommended to set gradual deadlines that can determine the progress they make. These deadlines will help you strategise your path to the audit itself and ensure that you are able to put up a decent show when it actually happens.
You can also work closely with the auditors working on your organization to get a detailed list of information and documents they require. Most managers end up messing up the process due to sheer misunderstanding than actual negligence. Do not shy away from contacting auditors before the actual date of the audit and finding out the details they might be interested in. Most auditors know what they will be checking for during their audit of your organisation, which is why getting in touch with them at the right time can prepare you for what’s to come.
These documents usually contain bank statements along with reconciliations, trial balances, inventory records and an audit requirements list. Streamlining these documents might prepare you for what’s coming your way.
Reconcile Accounts Regularly
You should try your best to avoid running into reconciliation issues at the time of or before the audit period starts. Finance teams would want the reconciliation process to be done on a quarterly or even monthly basis, so that everything is on track before you get to the actual audit.
Your reconciliation processes should correct all issues in time before they turn out to be major impediments. The bank reconciliation statement is a must here, as it ensures that the balance you have in your bank is the same as the balance you have maintained in your books. The reconciliation between both balances can effectively save you from regulatory problems when it comes to the actual audit. If you reconcile your accounts on a regular basis over the year, you will have more than enough time to flag any issues that you might face during the audit. Correct your errors and gradually improve the reconciliation process with time.
Tackle Potential Problems in Time
If you’ve worked with auditors previously, you ought to know the kind of problems that perturb them the most. Knowing this, you should tackle and iron out potential problems in time before they turn big.
Most managers that have had encounters with auditors in the past realize just how peculiar they are when it comes to assessing new transactions and the impact they can have on your business’s growth. You need to get in touch with your auditor whenever you enter an unusual or a new transaction that you think might create problems. The auditor will tell you the right passage for reporting the transaction and recording it in your books.
Through this due diligence, you don’t have to comb through months and tons of old documents to clarify the transaction at year end. You know how to approach the problem when it is in its infancy and can take that approach further to minimise any possible alterations. Make sure you are also compliant with other financial covenants while recording different unusual and new transactions so that you are able to avoid any delays in the auditing process.
Get Digital Support
Digital support in the form of invoicing software and online accounting can prepare businesses in the period leading up to an audit. The worst thing for most management businesses at the time of an audit is when they aren’t able to find the relevant information pertaining to a specific problem.
Matters can get even worse and more difficult to manage if you have lost records of a possible transaction and cannot present them in front of the auditor. This makes you go through undue embarrassment and hassle and can lead to a lot of downtimes. Your key processes suffer as you and your team members are busy digging in transactions from the past to find proof of transaction.
This entire process can become a whole lot easier if you get digital support and have categorized all information in a readable format online. These programs can help you locate transactions and the history pertaining to them in a matter of minutes.
If you don’t have the budget for accounting software, you can scan and upload your documents online and store them in the cloud. This way, your documents are safely stored and are easy to find when you need them urgently.
All of these tips can help prepare your management business for a year end financial audit. Keeping these preparation tips in mind, you can work on minimising the downtime that comes with most audits. Less downtime spells better for your business.
These tips have been organised by the best in the industry and will help you prepare for audits in the manner you want. The tips will help ensure that your audit goes smoothly, and you can record the results to improve in the future.