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 headaches and 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.
What is an audit?
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)”.
In a legal audit, the company’s management team discusses strategic plans and objectives, review key documents and records, and analyze and identify current and projected legal needs of the company.
The legal audit also lays the groundwork for the establishment of an ongoing legal compliance and helps managers identify the legal issues triggered by changes in strategies, goals or objectives and allows planning for the legal tasks that must be accomplished as a result of the issues identified.
Benefits of conducting an audit
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 provides 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. 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.
It will give you a solid foundation for future planning
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.
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.
We know this, so if you need legal advice or need your documents reviewed, don’t hesitate to get in touch with our legal team.