When business owners hear the word “audit,” they immediately associate it with a dull and dreary financial process which is difficult to carry out and probably costs a lot of money.
However, this association is incorrect and has often limited many business-owners from achieving their business’ true potential through internal controls. Hence, today we build the case in favour of performing an audit for your business.
An Audit is formally described as a means to inspect a company’s accounts. For publicly listed companies, performing an audit is mandatory by law external professionals often carry it out.
However, unlisted companies can easily conduct an internal audit at the end of each year. Here are some reasons why you should consider carrying out an end-of-year internal audit for your business:
The first and foremost goal of an audit is to ensure that the company identify where it is underperforming and how this problem can be solved. Audits are quite useful in this regard because they allow the management to identify those weaknesses which would have normally slipped under the radar.
The internal audit helps management identify weaknesses so that they may implement a strategy to improve upon them before the problem becomes too big and requires a large amount of money to be spent on it. On that note, if you are interested in saving some money, check out these affordable mobiles contacts and reviews about office supplies.
2) Fraud Detection
In business, the smallest expenses are often disregarded due to their immaterial nature. However, these little expenses could eventually pile up into a huge loss for the business, thus an internal audit will help an organization determine whether there is any financially fraudulent activity occurring.
Whether it be through silent reallocation of funds or incorrect bills, the biggest business frauds have resulted in scams worth thousands of dollars. There was even a scam recorded where the employee used the office supplies account to steal hundreds of dollars a month. All of these undetected frauds could have been prevented through a simple internal audit.
3)Accuracy of Accounts
Perhaps the most important use of an internal audit is how it can help the management of an organization determine the accuracy of their day-to-day financial practices. An internal audit, whether performed once a year or once every quarter based on your organizational needs, will contribute towards streamlining of internal processes, whether it is inventory management or even conducting bank reconciliation.
Overall, internal audits are highly beneficial to any organization, as they serve as an element of control within the organization. These can help lower costs, improve productivity, and safeguard the business and its owners from the risk of fraud. It is a relatively low-cost way to prevent problems that will pile up the costs in the future.