Your comprehensive audit checklist

Armed with this checklist, ‘audit’ won’t seem like a dirty word…

If your New Year’s resolutions include shedding the excess, getting more organised and spending less time doing the things that bring you down, then a business audit may be just what you need.

While the ‘A’ word can feel like a scary concept, it needn’t be. You also don’t need to wait for the ATO to come knocking for an excuse to audit your business – it should be something done on a regular basis to identify and fix problems which may be costing you money, stunting opportunities for growth or pushing your business in a direction that doesn’t align with your goals.

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Internal or external?

There are pros and cons to both auditing your business yourself and contracting an independent auditor to investigate for you.

Having a third party poke around in your business confidentials can not only be an expensive exercise but can also feel invasive. However, having an objective second opinion could be the difference between identifying an issue’s root cause or letting it go by unnoticed.

When it’s your baby under the microscope, it can be hard to admit that something isn’t working. It can be confronting but an outsider’s diagnosis can bring to light pain points you didn’t even know existed.

While an internal self-audit may not reveal as honestly some of the less obvious problems, they are cheaper and therefore more easily conducted on a regular basis. It’s important to note that being a part of the business’ running does not qualify as an internal audit. An audit involves setting aside dedicated time to analyse your business using a structured review process.

A boost of confidence

Your review process should ensure you leave no stone unturned. That way, if the ATO does come knocking, there’s no need to stress. If you’ve nothing to hide, you’ve nothing to fear.

A comprehensive audit will also instil confidence in potential investors. Regular audits strengthen the credibility of your financial records and further justify your business valuation.

At the end of an audit, you should have a detailed outline of how to improve your business overall, making you more certain of the road ahead. What more of a confidence boost could you need?

The checklist

You know why you need to conduct an audit but now the question is ‘how?’.

An internal audit is a great place to start, and a professional auditor can help you take it to the next level.

We’ve pulled together a checklist to get you started. It’s organised by the different facets of business so you can easily understand what is and is not relevant to you. Remember, every business is unique so you may need to add components relevant to your specific business set up.

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Management

  • Do you have clear business goals set? Have you considered how you’re going to reach your goals and what it means to you if you don’t? 
  • Is the current organisational structure working? It is clear who makes final decisions in different situations? Are there any approval systems which are creating bottlenecks in the day-to-day running of your business? 
  • SWOT Analysis – Strengths, Weaknesses, Opportunities and Threats. This exercise is designed to highlight internal factors within your control (strengths and weaknesses) and external factors outside of your control (opportunities and threats) which may need leveraging or mitigating

Finances

  • Is your financial forecasting system accurate? Could you confidently use it to make important financial decisions?
  • Do you have a budget that aligns with your business goals? Are you adhering to the budget? Are there key areas in which large amounts of money are being spent unnecessarily?
  • Are you using a modern bookkeeping system which is appropriate for your industry? 
  • How much time does your bookkeeping and accountancy administration take up? Are you adhering to the ATO regulations and meeting the submission deadlines? Could you outsource these tasks to an accountant?

Employees

  • Are all your employees contributing value to the business? (A nice way of asking ‘is everyone pulling their weight?’)
  • Are you paying your employees correctly?
  • Do you regularly conduct performance appraisals? 
  • Are you offering your employees opportunities for professional development?

Identified some pain points? The Tradies Accountant consultancy service can provide professional guidance to align your business practices with your business goals. Contact us today! 

Ellen Mubwandarikwa