Why your business should conduct an annual audit

Why Your Business Should Conduct An Annual Audit

Linkilaw Company Law, Insurance Covers, Record Keeping & Taxes

As a high-reaching business owner trying to keep up with the ever growing competition and customers’ demands, you probably like to cut corners whenever possible. If we’re right, then you may have frowned at the piece of advice from our title, but give us the benefit of the doubt for a second. While the benefits of conducting an annual audit may not be immediately apparent, it pays off as it can potentially save you much more money in the long run. Think about it: in business, as in life, you have to take a break from time to time and review what you have achieved so far, which is exactly what an annual audit is.

 

According to Merriam and Webster, an audit is a “systematic examination and verification of a firm’s books of account, transaction records, other relevant documents, and physical inspection of inventory by qualified accountants (i.e. auditors)”. First and foremost, an annual audit is by far the best tool we have available nowadays to check financial procedures in place.
And this is why you should use it to take your business from strive to thrive, as the cool kids would say.

Are You Losing Precious Resources Without Knowing It?

There may be a leakage in your workflow process without you or anyone else working in your company ever noticing it. Every business, regardless of what it does, has a certain number of systems and day-to-day operations in place, but have you ever wondered how efficient yours are?

Even if your company is small or the workload isn’t so overwhelming, it doesn’t mean you shouldn’t benefit by saving more time, or money, or both at once, just by changing how you run your business. Keep in mind that even a simple tweak can make a universe of a difference. An experienced auditor or audit team can help you “get more bang for your quid” by figuring out when and where you are scattering your resources.

However, it’s up to you to then amend it.

An Annual Audit Provide Assurance To Both You And Others

Depending on the type of your legal business structure, you may be the sole proprietor and manager, you may have a partner, or even have founded a corporation. In any case, at least one person in one the company’s top positions should have a full and deep grasp of its financial and legal health. If your firm is operated by a board of directors, stockholders, or is a sister company to a bigger one, regularly conducted audits will provide firm assurance that business is running as it should. Even if the audit has revealed some serious shortcomings, the sooner you are aware of the issues, and the more information you have, the better you will be able to remedy them.

A well-conducted and thorough audit especially comes in handy is when you’re applying for a bank loan. Now more than ever, the bankers are looking for very detailed financial statements from company owners, so make sure you prepare and provide all of the information needed in a thorough and transparent manner.

It Minimises The Possibility Of Fraud

If you have other people working for you, no matter how few or how much you trust each of them, it doesn’t hurt to run a little check from time to time. An experienced auditor reviews procedures to detect any suspicious actions or potential fraud committed by your employees. What is more, employees are less likely to dabble in any illicit business if they know they are going to fall under the scrutiny of an auditor at some point in the near future.

It Will Give You A Solid Foundation For Future Planning

We love this quote by Daniel Oakland, Principal Solicitor at Oakland & Co.: “[One of clients’ worst mistakes is] not realising that it costs a lot less to get it right than to put it right!”
Exactly. That’s why an audit is so crucial to your company’s success for the future: it results in precious output that should become the foundation of your future planning and business strategy. What can you do better, what works and what does not? An annual audit will tell.

Even if you decide to put your business on sale, first you need to identify and assess the strengths and weaknesses in your system. It’s better you do it before any possible buyers come back to you with issues they found! This way, you get a chance to rectify any shortcomings – which means you can raise the price for sale before you clinch the deal.

To make an audit as pleasant as possible, you have to put on your A game throughout the entire year and work consistently for the results you want. “No pain, no gain” is especially true if you’re a startup. The logistics of running a young and ambitious company with fewer resources urges you to put in more creativity and knowledge than most.

With that in mind, we have created a fantastic startup eBook aimed at helping you get through the growing pains of your young startup. And if you need anything else, just let us know!

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