Annual financial audit means a lot of paperwork, so organizing important documents for the process is critical. Padgett Advisors says it is essential to prepare all financial statements such as balance sheet, income statement, and cash flow statement for checking. Appeal for bank statements, payroll stubs, recent tax filings, and invoices.
It is also important to take note of all records that concern fixed assets, borrowing and loan agreements as well as any other contract dealing with financial activities. This would mean that having these documents ready would help to ease the auditors when they are conducting the audit.
How should you organize your records?
Organization of the financial records must be properly done to avoid confusion or making mistakes that may result in loss of money. They should also sort the information according to their type and time at which they were compiled and keep records in order, either electronically or on shelves.
For financial information, make sure to use an appropriate accounting software or program for efficiency and accuracy. Other records should also be updated frequently to display the latest information is key. While clean and well-structured and arranged records are advantageous in the audit process, they also give a nice outlook of an organized and well-prepared business.
What Is Internal Controls and Their Purpose?
Internal controls are policies and measures that are adopted within an organization to safeguard the accuracy of reporting. Some of the most common internal controls are mentioned below:
Some of the most common internal controls are Review and strengthen these controls before the audit. This encompasses guarantee that all funds expenditure undergone go through authorization, documentation and scrutiny.
To ensure that fraud and errors do not occur in the company, you need to undertake segregation of duties. Internal control procedures have the effect of ensuring auditors have adequate confidence in the financial statements being presented.
How to implement accounting standards?:
Get to know the rules and regulations under the law on accounting standards and acidic applicable to your field of operation. It is important that you make sure that your financial statements are prepared in accordance with these standards.
This article makes it clear that it is helpful to provide training sessions for accounting staff regarding updates and changes to accounting principles. The application of accounting standards is not only a way to improve the credibility of financial statements but also can provide a less problematic audit.
What Should Be Done Pre-Audit?
Having conducted a pre-audit review is an acceptable measure in audit management. This entails the examination of financial statements or records to detect or prevent irregularities within an organization.
To ensure that account balances are accurate, follow the steps below: Ad hoc checks and any discrepancies are eliminated before the arrival of the auditor so that adjustments are not made during the audit process.
How Critical Is Interaction with Your Auditor?
The building and sustainment of good relationships between you and the auditor are critical. Hold a series of meetings to make a plan of the audit, the estimated time and any special aspects that need to be focused on. Respond to any questions or issues that the patient might have as and when they arise.
Producing all necessary documents and information at the auditors’ request as soon as possible proves that the organization is proactive in maintaining the efficiency of the audit. It is crucial to establish a friendly relationship with the personnel and which can be achieved through good communication hence enhancing the chances of fruitful audit.
Conclusion
Since financial audits are a critical part of the business, proper preparation to facilitate an effective audit is very important. Policies include capturing the current documents, records classification and storage, implementing internal controls, checking compliance with the accounting standards, pre-audit report, and communication with your auditor, would show professionalism and accurate finance.
These steps not only make the audit processes easier, but they also improve the accuracy of Financial reporting hence, the overall image of your organization’s financial health.