A business audit evaluates a company’s financial statements and records. Audits are typically performed by an outside party, such as an accountant or financial institution. Businesses are usually required to have an audit performed on an annual basis.
An audit is basically a comprehensive review of your business’s financial records. This includes going over your income and expenses and your assets and liabilities. The purpose of an audit is to ensure that your financial records are accurate and up-to-date.
Conducting an audit can be beneficial for a number of reasons. For one, it can help you identify areas where your business may be losing money. Additionally, an audit can also help you spot any potential errors or irregularities in your financial records. Keep reading to learn more about audit and overall bookkeeping for your small business.
What Happens in an Audit
A business audit is an in-depth examination of a company’s financial records to ensure they are accurate. This process involves reviewing financial statements and ledgers to ensure all figures are correct.
An audit can assist businesses in finding any errors or discrepancies in their accounting, which can lead to issues with financial reporting and more difficulties in correcting mistakes later on. Additionally, an audit can help businesses keep track of their overall financial health, assisting them in setting future goals.
Internal and External Audits
An internal audit is an evaluation of a company’s financial reporting by someone within the company. Internal audits are often done as a preventative measure to catch any mistakes in financial reporting. They are not as formal as an external audit, but they are still useful in monitoring a company’s progress towards its goals.
External audits are conducted by registered company auditors not associated with the business being audited. The auditor looks at the business’s financial records to make a judgement about their accuracy and organisation.
The Corporations Act 2001 requires that businesses are audited following the Australian Auditing Standards. This means that a transparency report should be created to show the review results to companies.
If you are a public company or a company with more than 20 shareholders, you are required to have an annual audit. However, we recommend that all businesses, no matter their size, get into the habit of having an audit at least once a year. Not only will this give you an in-depth look into the financial health of your business, but it will also help you to identify any potential risks or areas of improvement.
The auditor will assess your internal controls and procedures to ensure they are adequate and effective. Once the audit is complete, the auditor will issue a report detailing their findings and recommendations.
The Importance of a Small Business Audit
Auditing is crucial because it helps ensure that financial statements are accurate and consistent. This, in turn, helps avoid penalties from the Australian Taxation Office (ATO). Additionally, regular auditing can help prevent record-keeping from becoming sloppy or disorganised.
It is important to have an audit if you want to improve your business’s efficiency and internal controls. An external audit is a great way to have your operation evaluated by professional accountants and tax agents who understand a business’ finances to a higher degree and can alert you to any issues or where your practices aren’t up to standard.
Internal audits are conducted by a company’s staff and are usually less comprehensive than external audits. Internal audits typically focus on specific areas of concern, such as compliance with company policies or procedures.
Bookkeeping for small businesses is a critical task that should not be overlooked. Small business owners must keep track of their finances to ensure that their business runs smoothly and efficiently. There are many different bookkeeping methods, such as conducting audits to help small business owners with this task. The most important thing is to find a system that works best for you and your business.
If you need auditors in Brisbane, turn to SMB Accounting. Our business does individual tax returns, small business accounting with various small business accounting packages available, SMSF audits (self-managed super funds), as well as a Xero accounting software-based accounting business. Get in touch with us!