Many business owners carry out business audit activities, usually annually, in order to ensure that the financial records are correctly filled completed and reliable. There is a common trend in many business sectors, whereby the accountants practices audit trails, whereby any financial transaction made, is recorded, along with the accurate date and the individual who made the recording. Business audits concentrate on accounting books, whereby all the financial is recorded and the financial statements, which are issued to the clients, and the copies left with the accountants. The following are the advantages of business audit;
Easy tracing of a problem – through auditing in your business, you can easily make better decisions, which are more accurate and reliable, because the auditors can trace and rectify errors which might have been incorrectly recorded.
Reliable audit reporting – in order to ensure auditing efficiency, auditors write a detailed report of all the findings during the auditing process when a small or large business is audited. The business owners can therefore rely on the audit report in order to work on any record which is inaccurate, or missing.
Accounting books in every business are important, they help in recording all the income and expenses. Auditors also find it easy to go through well recorded accounting books, which have all the relevant details allowing them to trace all activities carried out through out the period of operation. The following are the main types of auditing, which helps business owners, especially in small firms to keep a better track of their business progresses;
Internal audit – this is managed by business owners or any member within the business platform. The major sector which is mostly investigated is the financial sector, in order to ensure that every financial spent or gain, is recorded according to budgets and goals. Internal auditors investigate the business management and operations sectors, in order to make sure that every part of the business is well taken care of and productive. The audit managed internally is very important for your business, because you will confidently provide an accurate report of the business analysis to the board members or the shareholders.
External audits- this means that your business shall be audited by a third party, which is not directly involved in the business operations. The external auditors, such as the local tax agency, IRS which focuses on small business tax return discrepancy, or the insurance company, are restricted to following a set General Accepted Auditing Standards (GAAS) which leads to an accurate end report. External auditors may work differently, because some may tend to write a full report of every business sectors operation, while others may major on specific parts, either the financial sector, or the operation and management sector.
In conclusion, a business audit is very important to every established business, because the owners will get accurate reporting at the end of every audit, hence measuring the current business progress. Through audits, you can develop improved or new accounting processes and you will also receive a guide to help you make good financial decisions.