Audit Readiness: Unveiling the Role of Technical Accounting

Everyone has heard the word “audit” but few people understand everything that it means and how important it can be to your company when it’s time for your records to come under scrutiny. An audit isn’t something that can only be run by the IRS and that’s an important fact that many businesses don’t understand when they’re trying to get their books in order. An audit is something that can be carried out at any time, just to make sure that your company is ready to stand up to an official one.

That’s why it’s important to consider your audit readiness at all times of the year and not just when tax time rolls around and you have to submit your paperwork again. Every company should be ready for an audit and some companies can help you make sure that you’ll pass the next one you’re subjected to. It doesn’t matter how long it’s been since you’ve taken a long look at your books, audit readiness is something you should always have.

Preparing for an assessment

When you decide that it’s time for your company to get ready for an audit, there are many things you can do to make sure that you get through it all without a problem and these are the steps to take. Your first goal should be to update your accounting system and reduce the number of tasks that are carried out by hand, by employees. The best auditing books suggest that anytime you allow an employee to carry out any record-keeping task, you’re opening the company up to errors that will take lots of time and lots of money to rectify.

Next up you want to make sure that you’re closing your books on the last day of every month. It’s simply good practice to keep everyone on the same page and turning a suggestion into a hard and fast rule is the best way to do it.

Seek out professional help

Finally, make sure you don’t go through the process of readying your company for an audit or auditing it yourself. There are third parties that can look at your books and give you a real score that will tell you how your finances and record keeping look.

These third parties have no reason to embellish or hide the facts from you. You’ll get all the data in its rawest form so you know where the problems lie and how to fix them.

Streamlining processes and implementing best practices

Once you have decided to prepare your company for an audit, there are several important steps you can take to ensure a smooth process and increase your chances of passing with flying colours. One crucial aspect of audit readiness is updating your accounting system and minimizing manual record-keeping tasks performed by employees. By relying on automated systems and software, you can significantly reduce the risk of human error that may lead to complications during an audit and difficult questions.

Despite the best of intentions, even a skilled accountant or diligent reviewer can make a mistake. It’s essential to recognize that any task performed manually introduces a higher probability of mistakes, so streamlining your processes should be a priority.

Another key practice to adopt is closing your books as close as possible to the last day of each month. This practice promotes consistency and synchronization among your team members, providing a clearer snapshot of your financial standing at regular intervals. By implementing a firm rule of monthly book closure, you establish a disciplined approach to record-keeping and reduce the chances of discrepancies or oversights. While it is not feasible to complete all necessary accounting adjustments such as prepayments and accruals at the end of the month, as these require analysis of the final position, it is possible to close all sub-ledgers such as the accounts receivable, accounts payable and fixed asset sub-ledgers to ensure that standard transactions have an accurate cut-off.

The value of external auditors

While it is valuable to take proactive measures internally, seeking professional help is also highly recommended. Engaging the services of a reputable third-party auditor can provide an unbiased assessment of your financial records. These independent auditors have the expertise and experience to review your books thoroughly, uncovering any potential issues or discrepancies. They provide you with an accurate evaluation of your company’s financial health, ensuring transparency and objectivity. With the raw data in hand, you can identify areas that require improvement and take corrective actions promptly.

In addition to identifying problem areas, external auditors can offer valuable insights and guidance on best practices for maintaining audit readiness. They can help you implement effective internal controls, suggest improvements to your accounting systems, and provide recommendations to enhance your overall financial management processes. By leveraging their expertise, you can enhance your company’s financial governance and mitigate risks associated with inaccurate or incomplete records.

Remember, audit readiness should not be treated as a one-time event limited to tax season. It is an ongoing commitment that necessitates regular review and refinement of your financial processes. By staying prepared at all times, you minimize the chances of facing unexpected issues during an official audit. Maintaining accurate, well-organized records not only helps you meet compliance requirements but also instills confidence in stakeholders, such as investors, lenders, and potential business partners.

In conclusion, every company should prioritize audit readiness as an integral part of its financial management strategy. By updating accounting systems, implementing monthly accounting book closures, and seeking professional assistance, you can ensure that your records are accurate, reliable, and compliant. The involvement of third-party auditors brings an added layer of objectivity and expertise to the process, allowing you to identify areas of improvement and take necessary actions. With a proactive approach to audit readiness, you can safeguard your company’s financial integrity, instill trust in stakeholders, and position yourself for long-term success in an increasingly regulated business environment.