Financial auditing – How to prepare your business
Financial auditing is vital for the success of any business. While a business may appear to be financially stable on the surface, financial auditing can reveal potential problems or inconsistencies in spending that could become problematic over time. In short, a financial audit is the assessment of a business’s financial statements by an objective third party.
The financial auditing process concludes with publication of documents stating whether the business’s books that reflect annual spend are accurate, relevant and complete. This report provides interested parties such as investors, board members and partners with information on the success and financial health of the business. A secondary reason for financial audits is to ensure that businesses are recording their cash flow correctly according to the Generally Accepted Accounting Principles (GAAP).
Accounting systems, such as QuickBooks financial software, are effective tools that help business owners keep accurate records throughout the year and are greatly beneficial during a financial audit.
Preparing for a financial audit is advisable in order to ensure that the process runs smoothly and that your accounting practices are transparent and accurate. Continue reading for advice on how to adequately prepare for a business audit.
Financial auditing preparation steps
- Keep receipts diligently
- Ensure accurate bookkeeping
As with your receipt keeping, your bookkeeping system should be diligently adhered to. Ensure that all income and expenses are recorded accurately in a timely manner. If you don’t record your financial transactions regularly, you could find it difficult to remember when they were made. With regular bookkeeping, you can save a significant amount of time in the long run.
- Be helpful and transparent
While an audit often feels like a time-consuming hassle, it’s imperative that you’re helpful and assist the auditor as much as possible. By being helpful and quickly providing the requested information or documents, you can ensure that the audit runs smoothly and doesn’t take longer than absolutely necessary.
- Learn from the experience
Think of an audit as a chance to discover errors in your accounting system and learn how to avoid making the same error in the future. While auditors aren’t responsible for teaching you how to keep accurate financial records, they can identify problem areas and offer valuable advice.
Preparing for a financial audit starts long before the audit takes place. In fact, your business should always function as if an audit is imminent. All business receipts should be kept and stored in a logical filing system because an auditor is likely to require evidence of payments for which tax has been claimed and business owners should be able to locate such documents easily.
Prepare for financial auditing with QuickBooks financial software
QuickBooks offers a selection of accounting software packages that can help business owners to record their income and expenses accurately from day one. Choose the right accounting software for your business today, or contact QuickBooks for advice on which package will best meet the needs of your business.
QuickBooks SimpleStart - for new and home based business
The simplest way to manage and track money going in and out of your business.
QuickBooks Pro - manage your business accounts simply and easily
Manage your business accounts simply and easily.
QuickBooks Premier - fast and easy advanced accounting
Fast and easy advanced accounting.
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