A financial audit is all about looking into the financial net worth of your company. This primarily involves checking business accounting records, internal control policies and other major business financial concerns. While you are not obliged to conduct a financial audit internally, this practice is seen as an important procedure in preparing your business for an upcoming external audit. If you’re not sure how to start a financial audit, here are some practical steps to get you started:
1. Improve financial documentation.
Looking through your company's financial records require a thorough scrutiny of your financial documents. Examine the records you have at hand and make sure that all the pertinent information are being monitored. At this point, it is not enough that your financial data is accurate; it should also be complete.
2. Check internal policies.
Once you have gone through your financial records, you will likely discover discrepancies or simple data entry errors or records that have not yet been updated. Go back to the internal policies that your business has and make corrections based on the existing policies. This will help ensure the accuracy and completeness of your business financial data.
3. Review accounting system.
The next step requires an in-depth review of the accounting program you are currently using. Make sure you understand how specific features work so that you can maximize the use of your cloud accounting software.
4. Compare financial records.
Go back to the financial records you have obtained from your accounting system. Compare these with your records in the bank versus the financial information indicated in your ledgers.
5. Discuss your initial assessment.
Discuss the outcomes of your internal financial audit with the members of your accounting staff. Try to agree on a new set of standards and policies to help improve your internal accounting processes. This will help you be on your guard when the Canadian Revenue Agency conducts an audit for your business.
Doing a financial audit gets you one step ahead for the inevitable business audit check. Get it done now to avoid problems with the CRA in the long run.
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