The words ‘financial audit’ can cause panic to ripple throughout an office, no one likes the thought of going through an audit! However, although this is not always a pleasant experience, there are ways to make it easier to handle, given the right approach and attitude, which will improve your business and help you stay ahead of the game.
Here are our 8 tips to a successful financial audit
This is key to a successful audit – organisation. Be sure to know everything that is going on and that has gone on over the past year. Everything needs to been reconciled down to the last penny and ensure all records are in order and up to date.
Have a team meeting to clarify that all team members are ready and understand what is about to take place. Team members need to be helpful if the auditors communicate with them. This comes with knowledge, so it’s worth spending time with staff so they know what they need to know.
Use the right audit company
This is a vital step to get right when it comes to your financial audit. Having a company that a) has experience and industry knowledge along with b) using a company that already works with similar businesses and who will understand your business, will make the process run smoothly. There is no ‘one size fits all’ when it comes to this process, ensure that when looking for a company to perform your financial audit, you use a company that is inline with your industry that also fits your cost bracket.
Understand what the audit entails
It is possible and advisable to meet with your audit company prior to the audit taking place, enabling you to have a better understanding of the process and what is due to happen. By meeting with them and asking questions beforehand, it will give your business a better chance to prepare for their requirements and for the process to be quicker and less painful.
Designate a person
Having one point of contact from your end will make the audit easier to manage. It will save messages and details getting lost in transition and will mean that the audit company has a dedicated person they can relay information to. This person will need to have knowledge of what is happening and what is required and have the time available to give to the auditors when they communicate. Usually this person will be the finance officer, financial controller or already have a clear and good understanding of the financial procedures in order to streamline the process.
Have information ready and available
The auditors have priority and therefore balancing your everyday workload isn’t always easy but is important so you can be ready for the auditors and what they may require. Be ready to provide the information they are going to request. By having meetings or communications prior to the audit, you should have an idea of the information that they will be looking for. If you need to request information from outside parties, e.g. banks or suppliers, ensure that this is done beforehand. Not being ready and delaying the audit process can become costly.
Learn from the past
Once you’ve had one audit, you’ll know what to expect next time. Year on year learn from what has happened previously and take notes ready to remind yourself for the next audit. If something went wrong this time, take measures to ensure it doesn’t happen next time. Research the reasons why things didn’t work and put plans in place as precautions. Internal controls and procedures can be introduced to help the following years’ audit practice, the easier the process, the better it will be for everyone.
Asking questions is allowed! In fact it’s best to ask than to be unsure. In order to provide accurate and timely information always check and gain clarification if you are not sure. The auditors would rather something be correct the first time around, than having to repeat a process due to misunderstanding. This will have a cost implication – time is money which will come out of your business funds.
Once the process has been completed, take time to evaluate the results. The audit company should be able to provide feedback and guidance if needed and you can hold a post-audit meeting with team members to go through practice measures and what results have been given, offering a chance for questions and to implement changes.
At the end of the day, an audit is a necessary process required in order for a business to stay healthy, there to help boost the well-being of a business. Embrace it and learn from it and allow your business the best chance of success.
We do not personally provide statutory financial audits here at Kara Accountants but we can assist in internal audits and the preparation for a statutory audit. If you’re due to have a financial audit and are looking for financial advice prior to process, we’re happy to help, get in touch!