The word “audit” puts many people under serious nervousness. The only thing many individuals assume about audits is a team of professionally dressed people breaking-in into the office and forcefully checking every account file. This isn’t true. Audits are any physical inspection done by an external or internal person or a team of people. Internal audits reduce the chances of mistakes and frauds. Internal financial audit helps businesses understand their financial position and improve if necessary. So, how often should you conduct an internal financial audit? Here is the list of times when you must conduct a thorough internal audit of your organization.
Mistakes in Books of Account
If you check your books of account on a regular basis, there may be instances when you find mistakes in the numbers. Also, at the end of every month, it’s common that an account has little more or less money. This is the time when you must conduct an internal financial audit and go back to all the statements and invoices to find out what went wrong. During this audit, you may also identify that the process of bookkeeping or maintaining books of account isn’t very active and is causing your employees to make mistakes.
A dip in your organization’s profits cannot always be due to market conditions. It can happen due to several reasons such as internal inconsistencies. If your organization isn’t paying much attention to the accounts receivables and timely invoicing, it will affect your profits and even result in a downfall. When you notice a gradual decline in your profits, you must conduct an internal audit to find out what isn’t working right. Whether it is due to external factors such as market conditions and change of prices of goods or internal reasons such as poor compliance. You will be able to take right steps accordingly to elevate your profits once the audit is done.
Before Any Investment
When you ask someone to invest in your business, there are high chances that investors might do a full review of your financial statements. You must make sure that your books of account and statements are updated accurately. Any mistakes in the statements or incomplete books can lead to a bad impression of your business. Therefore, conduct an internal financial audit before talking to investors to make sure all the entries are updated regularly and correctly. And before presenting the statements for investments, check and recheck them to ensure that they are prepared.
You can also conduct financial audits on a regular basis, say weekly or monthly to make sure there aren’t any confusions at the end of every month. Regular audits also help you to run your business in a better way as you can identify the pain points of your organization. If you find any difficulty in conducting your internal financial audit smoothly, you can seek help from professional financial auditors in Edmonton.