5 Essential Steps to Make Your Company’s Audit Easier

Audit is something that often evokes negative emotions and thoughts from people and business owners. An audit is a thorough examination of a person or company’s financial records for a specific time frame.

Corporations and private business owners are audited sometimes annually to ensure their books are accurate, they are documenting all their financial transactions correctly, and they are paying their staff, fees, and taxes properly. Government and other agencies audit businesses to ensure they are being honest and accurate in their bookkeeping and financial transactions.

Companies who fail to disclose certain income or expenses, do not pay their taxes, or who are caught doing questionable money related dealings, can face legal charges, penalties, license suspensions, and court dates. It is important that all businesses, no matter how big or small, be prepared to have their finances reviewed. A good way to ensure your business operates efficiently is through using a logistics company. Should your enterprise be audited, these tips will help the process go more smoothly:

1. Keep Clear Records

Your financial records should show every financial transaction you have done throughout every fiscal year. A clear and detailed description of the incoming or outgoing monies should be documented beside each transaction, so an external reviewer knows exactly where and why the money was received or spent.

2. Business Related Transactions Only

Nothing draws a red flag faster than a personal or non-business related financial transaction claimed on a corporate financial ledger. Private and personal money matters should never be included in business operations. Attending events, shopping, dining out, and purchasing materials that are not solely related to company matters should not be reported in the company books if they are not related to the business operations. Every money movement should be clearly done as part of running the company.

3. Be Honest

Some company owners try to hide information, however, if you are or know one of those types of under-the-table businesses, experienced auditors are trained to pick up on deceit. Even if the misleading or omission of information was accidental and unintentional, it still looks bad on your behalf and can be misconstrued very easily as an attempt to hide money matters. To make the audit process run smoothly, always be completely honest about your enterprises financial matters.

4. Keep All Documents

Receipts, invoices, and purchase orders are proof of monies received or spent and the reason for the movement. It is evidence that what you say about the transaction is true. Just documenting the money move is not enough, you must have something to back up your actions. All receipts, invoices, purchase orders, and other documents proving your income and expenses should be kept in easy-to-access files, so you can show the auditor when they inspect your books.

5. Communicate Clearly

Miscommunication is just as bad as poor bookkeeping in audits. When asked questions, you should be able to provide clear answers that are easily understood. Whether providing the information through face-to-face, emails, or telephone conversations, your answers should provide the information that your auditor is looking for. Auditing agents should never feel more confused by your answer. The information you relay should not contain inconsistencies or differ from the book transactions. It should satisfy the accountant with an honest, straightforward, to-the-point reply.

Auditing of the company books by an external party is part of owning a business. But the matter can go more smoothly if you keep clear and accurate records of all your financial movements during your fiscal year. Providing all the documentation in an organized, detailed manner, helps the reviewers do their job so the process is more satisfactory for you and the professional.

Leave a Reply

Your email address will not be published. Required fields are marked *