Learn something new every day
More Info... by email
Business audits are evaluations of different aspects of the financial accounting processes utilized by the company. The purpose of the audit is to ensure that all financial records are in order, that standard accounting procedures are being observed, and that all income and expenses are properly documented. Many businesses as well as non-profit organizations make use of internal auditing procedures, as well as periodically hire an accounting firm to conduct an external audit.
Along with the use of a business audit to make sure all business accounting is complete and in order, the audit may also be called by a tax agency. Audits of this type may be a random sampling, and should not necessarily be viewed as any indication that the agency believes something is amiss with the information reported on tax returns and other documents. As long as the accounting is in order, then the business audit will go smoothly, allowing the situation to be resolved in a short period of time.
Preparing for a business audit does take some effort, even when the accounting records are in order. One of the easiest ways to prepare for an audit by an outside entity is to make use of an audit checklist. Checklists of this type can be found online and downloaded with ease. Accounting firms also can provide businesses with a generic audit checklist. In addition, many of the more robust accounting software packages will also include audit software within the package that can be used to compile the checklist.
With the checklist in hand, gathering all hard copy documents relevant to the business audit is a good idea. This includes copies of bank account statements, receipts, invoices, ledgers, and any other financial correspondence that is relevant to the audit. The idea is to have all supporting documentation for each line item in the accounting records easily accessible, so the auditor can quickly move through the process of evaluating the records themselves.
Another important tip with preparation for a business audit has to do with the arrangement of the supporting documentation. Making sure the documents are arranged in a logical manner can save a great deal of time. Often, arranging the documents in chronological order helps make the process of finding the document and verifying the entry in the accounting records very simple and quick.
Above all, it is important to offer complete cooperation during the process of a business audit. This is true whether the process is being conducted by an international audit committee, an accounting firm, or by a tax agency. Doing so will help to expedite the completion of the audit, make it easy to implement any changes or corrections that are necessary, and allow the business to get back to the task of generating revenue.