Is Your Business Financially Fit? Complete Our Audit & Find Out

Completing a Financial Audit on your business: Audit is not a dirty word

 The end of the financial year is a busy time for small businesses amid the scramble of completing stocktakes, maximising deductions before the 30th June and crazy sales times.  Conducting an end of financial year audit might be at the bottom of the to-do list however it is arguably one of the best opportunities to evaluate your business through performance, management, and financial audits.  An audit can identify operational problems, evaluate performance and productivity and keep all aspects of your business in line with your goals and initiatives for the new financial year.
 
The Top Benefits for completing an Internal Self-Audit and adopting good business practice include:

  1. Plan Forward and identify opportunities

    1. An audit enables you to objectively see what is working and what is not.  Done effectively an audit will give you a snapshot going on within your business so you can then make informed decisions about the current situation and the future direction of the company.

    2. An audit will help identify threats and opportunities before the next financial year rolls over

  2.  Identify and eliminate productivity drains

    1. Where a business has become stagnant in profit generation and growth it can be quite hard to identify leakages in productivity.  A self-audit can help identify areas of weakness and inefficiencies and provide the relevant information to help repair the operational shortcomings which can in turn help to increase profit margins and strive for economies of scale in operations.

  3. Attract Potential Investors and Lenders

    1. A business that has experienced positive growth in the current financial year may be in a position where they are looking for additional investors or lending to fund their expansion.  A business audit can improve confidence in your company and strengthen the credibility of your financial records paving the road for investment opportunities.

  4. Good Business Practices adds value

    1. A business that follows good business practice is more likely to have better cashflow and operate with less financial risk. 

    2. The Business may be easier to sell in the future at possibly a better price due to the commitment to maximising the business’s full potential

 
The Process
The nature of your business will determine how you go about conducting your audit.  The first step of the process is to establish an audit checklist.  The checklist is specific to you, your business and your industry however the underlying principles of self-review will have a basis for each and every business.  The following list is not exhaustive but gives a good framework of what should be included in your self-audit checklist:
 
Business planning

  • Top-level goals and company objectives

  • Mission statement and value proposition

  • Customers, target market and competitors

  • Business forecasting

Organisational structure

  • Are the roles of management and employees clearly defined and productive for the company

  • Clear, well-defined job descriptions and duties

  • Identify gaps in structure and roles or responsibilities that need to be filled

Finance

  • Review accounting/ bookkeeping systems and processes

  • Are you using accounting software and keeping financial records efficiently?

  • Are owners/ managers spending too much time on bookkeeping? 

  • Does the financial system help forecast business growth and cash flow?

  • Do your systems adequately manage cash through a nominated budget?

Budgeting

  • Is the company adhering to a budgeting system?

  • Identify overspending and poor budget allocation

  • Are expenditures and profit figures comparable to industry data?

Human resources

  • Do you operate in compliance with local and state HR laws and regulations?

  • Are there systems for recruitment, selection, and training in place?

  • Do you conduct performance and productivity evaluations and appraisals? 

  • Is workplace health and safety in check? 

  • Review wages, working hours and overall employment conditions

Operations & processes

  • Analyse and review current purchasing and operational systems

  • Conduct a supplier overview and product quality evaluation

  • Review and analyse pricing policies and margins 

  • Implement systems to regularly audit quality control and profitability

Marketing & promotion

  • Are you adequately promoting and marketing your business?

  • Is your marketing budget generating a return on your investment?

  • Review and adjust your marketing plan in accordance with business goals

Risk assessment

  • Review processes for managing risks

  • Is the company properly insured against professional or employee risk?

Taxation

  • Ensure BAS lodgements are up to date

  • Review super contributions

  • Plan the move to Single Touch Payroll

  • Review trade debtors and identify bad debts that may need to be written-off

  • Ensure all records meet the ATO standards and comply with regulations

  • Review balance sheet, and profit and loss statements for planning

  • Reconcile payroll and provide PAYG Payment Summaries to employees 

The above is not an exhaustive list but provides a good starting point of the types of areas you need to consider for your business audit checklist.  A more definitive checklist has been provided by CPA Australia that can be adapted to your business:

https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/business/good-practice-checklist-small-business.pdf?la=en
 
If your business could benefit from the completion of a self-audit, please contact our qualified accountants so we may help develop and build an audit checklist that is going to help you achieve your goals and objectives. 

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