Are You Ready for Audit? Go by the Checklist!
Getting ready for the audit can be overwhelming, and that would not be the case if one is well prepared for it. Whether this is your first audit or in case you have been in business for decades, an audit preparation checklist will ease the whole process in seamless and stress-free manners that will benefit your company.
1. Prepare Your Financial Records
First, gather all your financial records. This would include income statements, balance sheets, tax returns, and bank statements. Ensure all these records are accurate, complete, and placed in their correct order. That’s the foundation of a good audit.
2. Maintain Your Internal Controls
Internal controls refer to the procedures or processes your company institutes to ensure that financial and accounting information is presented accurately. Regular reviews of such controls must be carried out, and identification of weak or less-than-satisfactory controls must be outlined for enhancement. This will not only help in preparing your company for audits, but it will also enhance the robustness in the activities of your business.
3. Reconcile Accounts on a Regular Basis
Reconcile all the accounts, right from bank accounts down to credit cards. This will help in finding some differences between your records and the actual balance of the accounts, getting everything accurate before the audit commencement.
4. Supporting Documentation
Prepare some backup documentation for all types of transactions that may involve big amounts or are unusual. It can be in the form of a receipt, invoice, contract, or any other proof that can justify your financial activities.
5. Communicate with Your Auditor
There should be open communication between you and your auditor. Discuss well in advance of the audit your concerns and any questions that you may have.
These considerations shall enable you to determine the focus of preparation effort as appropriate.
6. Dry Run Audit
To the extent possible, conduct a mock audit with your personnel. A dry run audit enables you to uncover difficulties well in advance of an audit and afford ample time for correction.
7. Regulatory Compliance Review
Ensure that the particular business is well within the ambit of all sets of relevant laws and regulations, such as tax laws, labor laws, and industry-specific regulations. Compliance issues usually arise in the course of an audit; thus, it becomes highly important to take care of such issues well in advance.
8. Organise Your Records
Organize all your records in a logical, sequential manner. A well-organized file system not only impresses auditors but also speeds up the entire process.
9. Update Your Policies and Procedures
Make sure company policies and procedures are current and accurately reflect today’s operations. In the auditing process, outdated policies raise a number of red flags.
10. Stay Cool yet Positive
And lastly, keep cool and don’t lose your attitude. Audits aren’t just about finding faults but are, in fact, pretty much a great opportunity to improve your business practices so that everything may be running right on track.
