The end of the financial year looms, and this is usually the time that shareholders and directors work with their accounts department to draw up their annual financial statements.
You may blanch at the word “audit” as it has developed a number of negative connotations, more to do with forensic investigations, rather than the helpful tool it can be to plan and position your business for future growth.
What is a company audit and why is it required?
The term audit refers to the process of examining and evaluating your business’s financial statements.
During an audit, an auditor checks if the business’s financial statements are complete, up-to-date and correct. An auditor’s job is to ensure that your bookkeeping activities are above board and that your financial statements are a reflection of the real financial position of the business. A well-audited, up-to-date business grabs the attention of potential funders who want to invest in your company.
Why you should seriously consider auditing your company:
Firstly, in most legal jurisdictions it is a legal requirement for your company to be audited. Tax Compliance is taken seriously, no matter where you are in the world.
Auditing your company also gives your annual financial statements credibility. This is very useful in improving investor and shareholder confidence in the company, especially if your business is looking to expand through growth funding.
Audited annual financial statements will also help your business when working with banks in applying for loans for capital expansion.
Another key advantage to auditing your company is to make sure there’s no irregular expenditure, fraud, or embezzlement. As a business owner and director you are responsible for making sure your business can account for all its transactions. As companies grow it becomes more difficult to keep an eye on everything. An independent auditor will scour all the relevant documents to make sure that nothing untoward is happening in the business.
What happens if you fail your audit?
Unfortunately, many business owners only realise the true value of auditing after failing their audit.
If an auditor finds out that the company’s finances have been tampered with, or are not sound in any way, your business could face legal consequences. This can lead to not only a financial loss, but damage to reputation and a loss of confidence from shareholders and investors. In order to avoid this, it is important to incorporate your audit into your yearly planning and to make sure that your finance function is up to date.
If you do not have the necessary staff on board to handle this function seamlessly, then consider outsourcing your financial statements to a specialist company such as OutsourcedCFO. In this way, you have the necessary expertise on call to ensure a stress-free audit, without having to fork out for specialist staff on a monthly basis.
How to prepare for your audit:
Start with planning:
Make a note of dates and deadlines, and ensure that you and your accounting staff are aware of what needs to be ready for each submission date. If your in-house staff do not have the expertise to prepare financial statements, line up the experts before a crisis hits.
Make sure your accounts and all relevant records are up to date and correct. This means using the latest cloud-based accounting software packages in order to streamline and automate as many processes as possible. This saves time and cuts out human error.
Streamline paperwork such as receipts and invoices. Make sure that your staff realise the importance of submitting paperwork accurately and on time. Explore software options like Dext, which integrates with Zoho and allows you to scan and upload receipts digitally, as this will streamline the whole process.
What could go wrong?
Closing off your accounts and getting them ready for an audit can be challenging – watch out for the following sticking points:
Financial records not completeMissing or misplaced documents such as receipts and invoicesIncorrect entries due to human errorIneffective communication between various departments leading to missing dataUntrained staff who do not have experts knowledge
Calling in the OCFO experts to assist with your legal audit requirements:
The outcome of an audit is crucial for your business. The auditing of your financial records may either spell success or create additional work for you, based on the transparency of your records. But it’s a process worth going through as it provides assurance to stakeholders that your business is true and fair. To nail any audit process, the key is to keep your business financials up to date – but you might not necessarily have the expertise or manpower on your payroll to finalise your audit without a hitch.
But what should you do? Appoint an expert when you will only need them for a few weeks or months a year?
No – the solution is to plug in additional accounting expertise on an outsourced basis, to help you and your team get this year’s audit done on time – without placing a permanent burden on your payroll. Call in OutsourcedCFO and get in extra hands that understand the audit process and can help your team with the preparation of audit packs, answering the multitudes of audit queries, and everything else required to get the audit over the line.
Financial Statements:
Your internal finance team works hard to get each and every transaction of the whole year summarised to a trial balance level. Compiling financial statements on global financial reporting standards is, however, a fairly specialist task. Get this off your senior finance team’s desk, with expert drafting and consolidation expertise, allowing you to nail your audit requirements. We love helping groups compile sets of financials at full IFRS or IFRS for SMEs level that will pass the standards of any top 10 audit firm, and set you up for a stress-free audit. Further support on adjustments, audit queries and finalisation of financial statements enable your team to stay focused on the current financial year’s mission, without being tied down by the previous one’s reporting requirements.
If your business is facing a sticky audit, and you are not sure of your legal audit requirements, you will benefit from the services of our expert accounting team. If you need to know more about how we can help, contact us today for a consultation. Click Here to Contact Outsourced CFO today
