Auditors… Does this conjure up an image of an impersonal, fearful, detail-obsessed tyrant desperate to find errors in your accounts? I completely understand why the thought of an audit would fill you with dread, but this blog shares how to have the same positive audit experience that our clients enjoy and one that will ultimately help and support your business.
Think of an audit as adding credibility to your accounts. If a third party looks at them – whether they are a lender, customer, supplier or potential shareholder – they are assured that your accounts are accurate and a true reflection of your business position. That’s so important to know, particularly if they are going to trade with you or lend you money. Of course, businesses and charities of a certain size or with specific legal and financial concerns are obliged to have their accounts audited but every organisation, with a little bit of preparation, can make this a painless task and a very beneficial activity.
“Proper preparation prevents poor performance.” Stephen Keague
Deep down we all know that an audit is a positive thing, however, a significant portion of us only submit to an audit because we are compelled to do so. Often, the reasons why an audit is needed – and the assurances it will bring that will enable future trading and even growth – are not clearly communicated across the company to workers and managers. This can lead to anxiety and distrust. Employees become cautious about what they tell the auditor because they do not know how the information will be used and what any potential consequences could be.
My first top tip!
Take the time to explain to your team why an audit is necessary and how it will be good for business. Share how it assures everyone that the business has all the right policies, processes and procedures in place and that the organisation is being effectively managed.
It is perceived that audits make extra work. Employees can feel resentful that additional tasks need to be completed, files analysed and reports compiled – all for the ‘dreaded’ audit.
My second top tip! Preparation, preparation, preparation!
By planning ahead and briefing your team on what to expect during the audit, where records are located and what questions they could expect to be asked, will lead to better engagement between your organisation and the auditor. It also helps everyone to see any gaps in advance and to fill them before the audit starts. However, don’t over prepare as this can make everything seem like a bigger deal than it is – treat the audit as a business-as-usual activity that is designed to help the business.
Many see audits as a way to find mistakes and believe auditors are actively looking for errors so they can penalise the business… we are not looking for errors to penalise businesses.
Another Top Tip!
Encourage everyone to be open and honest with the auditor – hiding things won’t provide a true reflection of your organisation and will cover up areas where you could find improvements. Auditors are trained to find ‘hidden’ elements so trying to keep anything from us will cause unnecessary stress for everyone involved.
“It’s great when our auditors, Karen and Catherine from HB Accountants are on site. They are no bother at all! They know where our information is stored – we even provide them with access to our systems via their own logins and permission levels so they can access what they need directly. They have built up great working relationships with my team members and everyone always knows what to expect.”
Remember, an audit reviews your financial controls and management systems to help you identify risks and determine how best to minimise them. By engaging in an open and honest conversation, we can collaborate together and help you achieve a positive result, even adding significant value to your business.
For specific audit advice, contact Karen Chase, karenr@hbaccountants.co.uk in our audit department
