Here's why you have to undergo a year end audit
According to Meresa Morgan, an Audit Shareholder from Briggs and Veselka Co, companies have to undergo end of year audits for a number a reasons. For example, the shareholders or a legal regulator such as SARS may impose the audit.
Either way, the audit serves to prove your company's finances are legitimate. This provides credibility's and surety to all interested parties.
To ensure this assessment is unbiased, a neutral external certified public accountant must do it.
To ensure your company meets its audit deadlines and passes the assessment, you need to prepare.
Here, Morgan suggests the use of 'interim audits'.
She explains that there are small internal audits your accounting department can carry out. This is where our all important audit tip comes in…
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This is the tip that will help you ensure all your end of year audits run smoothly
Tip: Treat the end of every month like year end.
At the end of every month, do an interim audit on your finances. We all know the end of the year is hectic, so doing these interim audits helps you reduce the pressure on your company at this time of the year.
To do these monthly interim audits, follow these eight steps:
1. Check for any existing financial controls and make sure they're documented;
2. Review recommendations from your accounting CFO from the previous month's audit;
3. Meet with your CFO monthly to discuss major issues he found during the monthly audit;
4. Take steps to notify any interested parties if your company has violated any credit agreements;
5. Regularly check and prepare the documents your auditor will need to do your end of year audit to ensure they're in order before the time comes;
6. Reconcile and document any changes you need to make to your balance sheet accounts;
7. Ensure management, particularly your CFO, plays a role in this interim audit; and
8. Draw up a rough financial statement using the information from this interim audit.
The key here is to remember these interim audits should be small and focused; otherwise, they're too big to manage on a monthly basis.
Follow these eight steps every month to make sure your end of year audits always go smoothly.