Surviving your annual financial audit
When the end of the financial year approaches, many small business owners scramble to get their finances in order before their annual financial audit. While this may seem like a huge undertaking, if you’ve been recording and monitoring your finances accurately throughout the year, you should have little trouble preparing for your annual financial audit. And if you’ve neglected your finances recently, now is the time to set that right.
The most successful audit preparation tactic is to ensure that all financial transactions are correctly documented as and when they occur. Not only will this reduce the amount of work necessary at the time of an audit, but it will help you to have a realistic overview of your company’s financial situation.
QuickBooks offers a selection of accounting software solutions that can help small business owners keep track of their finances throughout the year, reducing the amount of stress felt at the end of the financial year.
However, whether you have kept accurate records or not there are several things that you can do to ease the stress of your end-of-year financial audit. Continue reading for some tips for surviving an annual financial audit.
Increasing financial audit efficiency
- Pre-audit planning The audit process should actually start long before the auditor arrives. Audits are an established process and while each auditor may work slightly differently, they will all require the same basic information from you. By compiling all necessary information, you can ensure that the audit process runs swiftly and smoothly, making less work for the auditor. And if the auditor feels that you’re well prepared, as well as being helpful and transparent, they’re likely to return the favour should any discrepancies arise.Pre-audit planning should include setting deadlines, preparing for the auditor’s information needs and documenting functioning internal controls. Setting deadlines is an effective way of breaking down the work into manageable portions and can also guide you to complete tasks in a logical order. Ensure that all deadlines concerning the auditor are confirmed with him or her before arrival. Once these deadlines have been set, you, the auditor and your relevant employees will be motivated to stick to these deadlines thereby encouraging efficiency.Preparing for the auditor’s information needs will speed up the financial auditing process exponentially. Specific information that the auditor may require includes financial statements as well as their accompanying schedules and working papers.When assessing your business’s finances and processes, the auditor is required to obtain a reasonable understanding of your internal control systems. A useful practice is to allocate the appropriate staff members with the responsibility of discussing the systems related to their area of expertise with the auditor.
- Staff communicationA financial audit often involves numerous members of staff and can interrupt their daily activities. Ensure that each staff member understands their role in the audit process and knows on which days their assistance will be required. This will allow your staff members to provide assistance without excessively disrupting the functioning of your business.Delegate the responsibility of audit coordinator to a single employee and give him or her the duty of liaising with the auditor. Should any extreme scheduling conflict arise, it will be this employee’s responsibility to negotiate a compromise with the auditor.
QuickBooks accounting software – making financial audits easy
While financial audits are an unavoidable part of running a business, they don’t need to be a stressful time. QuickBooks’ accounting software, including QuickBooks Pro, QuickBooks SimpleStart and QuickBooks Premier, can help you to document your income and expenses accurately to relieve the stress of your annual financial audit.