Knock off R34 000 from your audit bill with this one checklist
In most businesses, auditors spend more time preparing information and reconciling accounting records than performing their actual audit work!
For example, if your bookkeeper doesn't prepare your fixed asset register before the audit, your auditors will do this for you. And this increases your audit time by up to four days.
With audit fees at approximately R500 an hour, this will cost you an extra R16 000!
And this isn't the only error your bookkeeper could make that will potentially lose you money.
Read on to find out the common errors your bookkeeper could be making and the only checklist you need to knock off R34 000 off your audit bill today!
Three common errors your bookkeeper could be making
Error #1: Your bookkeeper doesn't prepare the fixed asset register and Vat reconciliation
When your auditors come in at the end of the year, they won't be able to start their work. They'll have to prepare this information before they can conduct their actual duties. This adds up to an extra four days in the audit time.
Make sure your bookkeeper keeps a fixed asset register and reconciles your Vat account regularly.
Error #2: Your bookkeeper doesn't prepare the year-end supplier reconciliations
Your auditors will first have to perform the verification procedures. This could involve the lengthy process of calling your suppliers to confirm statement balances at year-end.
I'm sure you'll agree this is quite embarrassing for your company. And not only that, the additional audit work will cost you an extra R6 000 in audit fees. So make sure your bookkeeper's conducted the reconciliations before the audit.
Error #3: Your bookkeeper doesn't file invoices and delivery notes in sequential order
Here, the auditors will take approximately three extra days to find the invoices and delivery notes.
Make sure you have a proper filing procedure in place. If you don't, you'll fork out an extra R12 000 in audit fees for this error. This is more than it would cost a month to have someone do your filing for you!
If your bookkeeper makes all these errors, that's a whopping R34 000 total in unnecessary audit fees! Read on for the only checklist you need to prepare for an audit and avoid this extra bill.
Checklist: How to prepare for an audit
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How sure are you that your trial balance is error free?
If it isn't, your financial statements will also be incorrect. This means
· Your accounting practices won't meet IFRS;
· You could declare incorrect taxable income to SARS, which means fines and penalties;
· Your company won't be compliant with the Companies Act of 2008 and the Income Tax Act; and
· You'll give an incorrect picture of your company's finances – and look guilty of fraud!
But don't despair. We'll help you tackle the problems in drawing up an income statement and balance sheet with this one tool.
Use this checklist to prepare for your annual audit BEFORE the auditors walk through your door.
Do you have:
Trial balance at year-end (including opening balances)?
Detailed general ledger for the year under review?
Your income statement and balance sheet? (Here's how to create them correctly)
Copies of the minutes of management and directors' meetings for the year under review up to the date of the audit?
Summary of directors' payments and benefits?
A list of legal disputes, including details and amounts involved?
A list of attorneys you currently use and their contact details, including labour attorneys?
A schedule of directors' interests in contracts?
Prior years' tax assessments and provisional tax returns?
All this will help you knock off up to R34 000 of your audit fees. And you'll be prepared every time the auditors come to your company.
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