As an SME, you should think about how you conduct your financial audits. Here are some of the ways you can do it and the benefits alongside the process.
What is a financial audit?
An audit is where you look at a business’ financial records for the year. It’s normally conducted by someone who is independent of the business (has no association) and must follow strict guidelines.
The aim of an audit is to see whether the number of finances received by the business reflects their position within the market and how much finances they have left over. This process is very detailed and requires discussions with management, examining a selection of financial transactions made by the company, and testing the strength of internal controls.
Auditors will look through the financial statements to ensure that the spending has been genuine and necessary. Audits often reveal where businesses might need to make room for improvement, such as within their internal controls.
What are the benefits of an audit?
The main benefit of conducting an audit is that the business owners and their management team will have a more accurate report of their finances so that they can take next steps accordingly.
Having an audit means that businesses can plan for future campaigns much better, and it also helps them to budget well for the future.
Audits can also highlight signs of fraudulent behaviour within the business – this is incredibly important for business owners who aren’t directly involved with their company and its operations. It allows them to trust their staff better and understand where they are performing well and where they might need additional training.
Why should you conduct regular audits?
You should aim to have an audit at least once a year so that you can see exactly how your business has grown or declined over this period. You’ll be able to compare your audit results to the previous year(s) and see where you are still lacking or where you have improved.
Giving management an overview of how the audit went will help to motivate them to hit company targets better the following year, as well as giving them a clear breakdown of where things might have gone wrong and what to focus on next time.
This also shows senior members of the company which teams will need more training to become more resilient in providing the best services for the business to perform well.