Conducting An Audit is Good Business
May 26, 2022
The word audit conveys negative images of disruption from day-to-day activities, endless questions, and bad news for many business owners. The truth is that an audit can provide business owners peace of mind. An audit ensures the company's financial statements have been completed correctly and gives insight into the company's financial position so business owners and shareholders can create a strategic plan for the future.
An audit must be conducted by an independent unbiased professional CPA. While the company may have an internal auditor, having a third party validate financial records will establish credibility and help prevent fraud. Understanding the audit process may alleviate a business owner's stress.
- Engagement Letter: A written contract that details the auditors' and managers' responsibilities to complete the audit.
- Audit Plan: Identifies who is involved on the client-side in the audit and establishes deadlines for activities and reporting.
- Compiling the information: During the process, the auditor will review the financial reports provided, ask questions about the reporting methodology, and may engage with the individuals or companies that owe the business money to ensure they understand the business model and identify weaknesses and create a risk assessment.
- Report findings: External audits also ensure that the financial transactions are recorded according to generally accepted accounting principles (GAAP). The report will also identify internal weaknesses or issues and recommend accounting procedures to mitigate risk.
A third-party audit not only ensures your financial statements are done reasonably accurately but also can provide business owners additional insights into the health of their business.
The team at Cambaliza McGee LLP provides several types of audits for nonprofit and for-profit industries. You can find additional information here or contact our team directly with questions.