“Audit”- a simple 5- letter word that gives most business owners the jitters; but audits really aren’t that bad. Internal audits are a great way to evaluate and improve business processes of any organisation. Conducting an audit at the correct time is also important to ensure that it is effective. If you are wondering when you should conduct an internal audit, this article is for you.
- When Seeking Investment– Investors thoroughly review an organization before providing with investment, so an audit before meeting investors is ideal. Prepare accurate financial statements in advance; make sure they are thoroughly checked and rechecked. Don’t give your investors a chance to find an error no matter how trivial even if it is something as simple as bookkeeping services fees.
- When Key Employees Leave the Company– When key employees leave, make sure you conduct an audit at least in the areas they were involved in. This can prevent problems in future; you don’t want to be in situation where you can’t explain discrepancies and the only one who can is no more with your company. You also know that everything is in order and the transition can be completed peacefully.
- If You Come Across a Discrepancy In Your Books– Never ignore a discrepancy in your books no matter how small the amount. Money is always exact, so there is something wrong somewhere if you come across a difference. Find out what the error is and address it so that you can prevent bigger mishaps in future.
- When There Are Fluctuations In Your Cash Flow– Cash problems are not always a result of market conditions; they can also result from ignoring certain aspects of your business like accounts receivable, bookkeeping services fees or inventory management. An internal audit is a great way to identify the factors that contribute to your organization’s cash flow problems.
Aside from all this, it is important to remember that audits are best done on a regular schedule. This can help identify and address possible problems before they escalate into bigger issues.