5 Best Practise For a Successful Business Audit

November 18, 2015

Understanding an audit exercise

Successful businesses are runned with processes, standards and policies. For any ligitimate business, these elements are subjected to an audit exercise, where the truth about how transparent and clean those practices are put to the test; and this is where compliance audit comes in.

Compliance audit scrutinize any activities or processes to ensure it aligns to the set of relevant rules the business has put in place. For any discrepancies, the auditor finds out the cause and suggests ways to reconcile and prevent further divergent and endorse where applicable. This includes both the internal and external laws and regulations. Internal laws include corporate policies, plans, procedures, and bylaws that the organization created to govern its activities while external regulations are enforced by the government through regulatory bodies.

5 things that can contribute to a successful compliance audit

While some of these things might looked overwhelming to some small and medium enterprises, the fundamental here is to have a transparent culture with the right due diligence and check and balance practices are implemented at all levels.

  1. Have an internal audit team. For the best results, choose very meticulous individuals among your employees to form a team of internal auditors; and make the most transparent among them lead the team.
  2. Subject every area of the business to audit. Never isolate any department from compliance audit. Just remember to start the audit from the high-risk departments such as operations, processing and accounting before moving to the less risky part of your business. Make it a point to get copies of departmental processes and cross-reference them against regulations to ensure that there is none that is noncompliant.
  3. Assess all reports relating to production, sales, and receipts volume. Use this rule of thumb; examine 20% of any volume is a good sample size for benchmarking. The samples should be chosen randomly for better results. However, you may need to adjust your audit team size accordingly.
  4. Make a list of items to observe when reviewing a file. Some good pointers to start with are items like loan documents, commitment letter, underwriting, contracts, company resolutions etc. Basically create a checklist to create a more focused and organized audit practice.
  5. Decide a workable timeline and reporting system. Since audits obviously disrupt daily business functions, a careful timeline and schedule should be designed to ensure audit processes allow stakeholders to still carry out their business as usual and daily routines. A practical and achievable process for review and reporting should be top of mind.

 

If only audit is as easy as a press of a button!

If only audit is as easy as a press of a button!

The bottomline of a successful compliance audit

The benefits of setting up an efficient compliance audit process are immense since businesses are subject to legislation and investigation. Compliance audit not only enables organizations to identify compliance issues quickly, but it also shows the the level of integrity and the legitimacy of the business in abiding the law.

It does sound quite demanding hence in terms of finance, it’s paramount for businesses to engage a reliable bookkeeping partner to go through the financial-jungle together. Let your partner do the navigating while you stay focus towards planning and executing what matters to you – making profit for your business. We understand because we are a business too. And its accounting.