Audits are the examination and verification process of a company’s financial records. These records are all financial data and information, like any monetary transactions, records of assets and liabilities, checks and invoices, etc. Seemingly stressful, careful planning and preparation can ensure smooth, accurate, and fair representation.
Why is auditing important?
Auditing or examination and verification are important for the credibility of a company. It gives shareholders confidence that their accounts are accurate and fair. It is also a channel to maintain trust and efficiency in the financial market.
What would happen without audits? Companies can misstate their financial position to something they have not reached yet. Financial audits help make investors, creditors, and stakeholders make better decisions. If the financial information provided by the company is not accurate or trustworthy, stakeholders might not want to engage with the companies.
What are the types of Audits?
- External audits
These are performed by external third parties who provide more unbiased opinions as they are not subject to conflicts of interest.
- Internal audits
These are performed by internal employees of a company for internal use. These are not usually distributed outside the company.
- Government audits
These are performed by the government to ensure that the prepared financial records do not misrepresent taxable income.
Useful tips
- Start Early
Don’t wait for the end of year to start preparing. Instead, spread tracking and scheduling throughout the year.
- Prepare all documentation
Don’t worry about having too much material, information, or details for your audit. For a detailed and clear audit, take anything and everything you think like sales, purchases, and leases that can help you in preparing your audit.
- Effective controlling year-round
To avoid a miserable audit experience, maintain effective control year-round and ensure accuracy on an ongoing basis.
- Task assignments
Assign responsibilities with a specific completion date, then add the tasks and timelines into a spreadsheet to maintain transparency and efficiency.
- Keep up with accounting standards
Keep up with updated accounting standards and legal and regulatory requirements so you can save time trying to make changes to comply with the updated regulations.
- Assess internal changes
Take your company’s financial changes from last year into consideration as these changes can affect the auditing process. These changes can be internal or external, like a new project being invested in, or getting a grant from the government.
- Prepare the data
Organise all working data like general ledger, fiscal year budgets, invoices and bills, transaction records, and financial statements.
- Assess past data and audit from the previous year(s)
Take your company’s audit from last year into consideration. These include all notes, recommendations, and information to ensure past mistakes are not repeated and where you need to improve.
- Gather new agreements/ amendments
Gather new agreements/ amendments to the existing or older ones like the operating agreements, lease agreements, debt agreements, etc.
- Reconcile all accounts
Reconcile all accounts like cash, accounts receivable, inventory, accounts payable, and accrued expenses.
Are you looking for a reliable London-based company to handle your financial audits and accounts? Contact Finchley Business Services hello@finchleybusiness.co.uk
