All businesses need to go through an internal audit every year. This is a very important process to go through because the internal audit will help in determining whether the business’ accounting books actually balance correctly with the company’s financial status. An internal audit is usually seen as a particularly stressful activity but it is a very important and necessary process that will help ensure the financial viability of the company.
To make an internal audit less stressful follow these tips:
* Be organized. Prepare all of your accounting books and all the other financial documents. An internal audit will usually encompass the last five years of the company’s operations, or the period covering the last internal audit. The audit will require that all documentation and books are available. If you already use digital means for accounting make sure that it is readily accessible. But make sure you still have physical books because it is still a requirement. To avoid any complications make sure that you also get the latest documentation reflecting your transaction history with your bank or other financial institutions.
* Look at the previous internal audit you went through. By studying how the previous audit was conducted you will have a fair idea of what you will go through and the actual extent of the audit. Follow the format of the previous audit and add any new information that you know will be asked for. You can call the previous auditor and ask for clarification if there are certain things that you don’t understand or confuse you.
* Have an audit strategy. Try to schedule the audit properly, giving enough time for each activity or step that the audit will take. Try to make it easy for the auditor by designating certain people in your staff to help in particular tasks.
* Look into any discrepancies you find. Pay particular attention to any that you think is unusually large because this will reflect badly on your company. Smaller discrepancies can usually be corrected so don’t worry too much if you find some. If you do discover fraud or embezzlement contact the authorities immediately.
* Assess your findings. List down what you have discovered and list it down. Note any positive findings so that you can propagate it and possibly apply it to other aspects of your business. Any negative findings should be studied thoroughly and a solution devised.
* If you can afford it, hire an external consultant to help you prepare for the audit.
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