Some company directors don’t consider audits all that helpful. Others might find the process too technical and complicated to understand, making it difficult to assess the worth of an audit service.
But a well-run audit will have some key features, allowing you to identify opportunities to improve internal procedures, guard against risk and help you plan for the future.
A fresh perspective from a well-experienced team might be just what you need, but how can you be sure you’re getting a good audit?
At its simplest, a good auditor will use their keen eye to equip you with the knowledge to hone your operations, identify efficiencies and improve forward planning and budgeting.
They do this by scrutinising and becoming familiar with your company and its processes, at which point they can advise you on a range of financial matters, improve your reputation in the eyes of lenders and other stakeholders, and recommend opportunities to improve internal controls and processes.
An audit can give the directors and shareholders the peace of mind the company is operating efficiently and improves the trustworthiness of the company’s published financial statements.
Be aware that audits are compulsory for many companies, including insurance companies, banks or where the company’s articles require one, but most small businesses are exempt if their turnover, assets and number of employees are under certain thresholds.
It’s still a good idea for a small business to think about an audit though, because it allows good planning, streamlined business procedures and an unbiased picture of your business’s performance.
What happens during an audit?
A range of tasks are carried out in an audit, a good one being tailored towards a company’s specific needs through meetings with their clients to discuss the business, its philosophy and work practice.
Auditors will then examine the books and records, ensuring that the best practices are in place. They will also ensure everything is in compliance with policy and regulation through their expert insight.
Some might also assess IT projects, systems and technology, and test systems to check everything is running as it should be.
They may also observe daily practices in the business, again identifying where things could be streamlined and improved.
A good audit will also be unobtrusive to let your staff work as normally as possible during the process. They should be there to observe, record and test your practices, not stall them.
How to prepare for an audit
The audit itself is just part of the process, the planning being just as important. Get this right, and the audit will run that much smoother and deliver better results.
We recommend getting in touch with an auditing firm well in advance of the audit date, so that you can allocate responsibilities, get confirmation on what documents you need and ask any questions you might need answering.
Such documents include a report documenting internal systems and controls, so that the auditor can get a picture on how to engage the audit process.
Financial documents, including sales figures, cash receipts, purchases and payroll will be valuable as well.
Auditors will also request documentation detailing a company’s obligations, such as current loan and lease agreements.
Remember that any good audit will be run by a firm committed to openness and answering any questions you may have.
Get in touch with our team today to discuss a financial audit of your company.