Audits are a wonderful process that helps organizations and businesses measure their performance and productivity against their revenues and expenses. They undoubtedly contribute to strengthening the financial integrity of companies.
It is worthwhile to conduct a self-audit of your company's financial statements to prevent accounting irregularities. The analysis of transactions and business records provides up-to-date knowledge on total net income. It is important to know, once the costs of production, amortization and taxes have been deducted, because the company might not be as financially stable as what we previously believed.
If you have a few moments, I would like to share with you several ways to perform a self-audit that will benefit the profitability of your business. (As well as doing it with the least effort and time.)
1. Gather everything that is financial
Before starting an audit, review the company's rules on how it stores and stores records. Good record keeping is one of the most important responsibilities for homeowners – whether their business is medium-sized, small, partnership or corporate. An effective registration system is synonymous with success or disaster for the company.
The United States Small Business Association (SBA) has published a Financial Literacy Record Keeping Guide that provides valuable insights into the development of an appropriate system. This system will make the audit process much more fluid.
2. How to prevent human error
Tenna's RFID tags, which provide real-time asset data, make it easy to review equipment purchases. It is important to collect business checks that have been canceled, all invoices and sales slips. Other financial documents that you (and your accounting department) must collect include sales receipts and bank statements.
The goal here is to collect as much financial information (even the electronic recordings of cash register ribbons) as possible, otherwise the accounting records will be worked with errors and discrepancies.
3. Do you need to update your books?
Depending on your region, you may or may not be legally required to keep books. Mr. Robert Kiyosaki, author of the bestseller Rich Dad Poor Dad, states that he pays the professionals well. "I have expensive lawyers and accountants, why? Because their services should save you money, and the more money they make, the more money I earn."
Mr. Kiyosaki also argues that paying a financial professional costs less than paying the government. With the accounting department well paid, make sure the general ledger and current financial statements are present; Arithmetic errors can occur at any stage of the process. Performing quarterly audits also shows you exactly where the money is coming from, and where it is coming out. It's a reason to stick to the budget when you finish projects.
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4. Analyze and compare
The analysis of the company's internal tax records allows you to compare these data and other data with the tax records, as well as with the taxes paid, documented in the accounting records of the company. These records should then be compared to the tax revenues of the IRS business for the last few years. This long, certainly lengthy process of examining deduction and appropriation requests will highlight erroneous reports.
An error like inflated expense numbers is dangerous and costly, and certainly
Audits provide companies with factual statements and records about the financial stability of the business. Any financial misstatement may result in tax penalties that the company can not afford, putting the company at risk of foreclosure or forced fees. Either or both of these scenarios jeopardizes esteemed and loyal customers and could cause them to do business elsewhere.
In the end, managers and all members of the organization should ask, "Are we offering quality products and surpassing our customers' expectations?"