Does an audit just highlight weaknesses?
The purpose of any audit is to review your business’s processes and records to ensure that you are fully compliant. Primarily, this is done by highlighting weaknesses. The main reason for this is simply because, by identifying the initial gaps or key areas which need improvement, you can then zone in on these and highlight them as target areas for change. This is an efficient method as it allows changes to be implemented without any outliers remaining or problems going unnoticed.
“[Virtual College’s] online auditing tool is designed to simplify the process of any audit – making the whole system quicker, easier to manage, administrate and report on” - Somerset Safeguarding case study
Here, we list four of the main advantages of highlighting weaknesses and explain how Virtual College’s Enable Audit system can help organisations improve their current level of compliance:
1. Identifies errors and trends
Weaknesses unearthed by external audits are an effective way of outlining errors in an organisation’s accounting process. Internal employees can sometimes find it difficult to review their own historical financial information objectively, whereas an independent audit makes it easier to discover lapses. External audits also ensure that businesses are recording their financial transactions according to the GDPR regulations, and can spot trends and patterns of errors which may not have necessarily been identified as ‘problems’ internally.
2. Allows for objectivity
External audits are an opportunity to gain a completely independent, objective and unbiased insight of a business’s accounting and data handling processes. Professional accountants can review data and information with a level of accuracy and validity that some internal teams might not be able to compete with. In some cases, accurate and transparent accounting information can act as proof when securing financial assistance from lenders and investors, so it makes sense to highlight weaknesses so that weak areas can quickly be removed or resolved.
3. Limits legal liability
Highlighting weaknesses is an effective way to avoid submitting inaccurate or fraudulent accounting information to lenders, investors or other external bodies post audit. If you do not report your business’s financial information accurately you can be liable. Plus, producing incorrect accounting information could even increase your business’s tax liability.
4. Educates business owners
Public accounting firms brought in to prepare for an audit, or external auditing bodies themselves, could provide business owners with expertise to improve their company’s overall accounting process. This would then result in professional insight for future accounting questions.
How Virtual College can help
Virtual College’s Enable Audit system will equip you with essential knowledge you need to become compliant. It will help you understand the expectations placed on your business, what an auditor expects from you and ensure that you are fully prepared for the upcoming GDPR changes. Sign up to our free overview.
Source: Small Business Chronicle