It’s a word that strikes fear in individuals and business owners. The word, audit, especially when the Internal Revenue Service is conducting it, it terrifies most people. But in the bookkeeping business and as a bookkeeper and accountant, audit is one of my favorite words. That’s because my clients, who find themselves required to undergo an audit, always pass with flying colors.
An audit is an official inspection of a company or an individual’s financial accounts. It’s usually conducted by a third party and gives a business owner important information about their financial record-keeping.
Just this week, one of the country’s top accounting firms, BDO America, admitted it issued false audit opinions about its client, General Employment Enterprises. Five of the firm’s partners have agreed to pay more than $2 million to settle charges that they gave an unqualified audit opinion of General Employment’s financial statements.
This million-dollar case reminds us of the need to make sure a qualified individual is behind your bookkeeping in an audit. In fact, here are some things you should be aware of when it comes to getting audited:
- ACCOUNT RECONCILIATION – When you hire a professional bookkeeper or accountant to go through you books, the most important thing to check on is that all of your accounts are reconciled. Account reconciliation ensures that all account balances are correct. This means your bookkeeper should be sharing with you a balance sheet that shows the money leaving an account is the actual money spent. Reconciling your accounts ensures accuracy in bookkeeping. If your bookkeeper or accountant doesn’t do this, call or e-mail us immediately!
- QUALITY CONTROL – If you have a full-time, in-house bookkeeper, then he or she should be doing your books daily or once a week at a minimum. Verification of your books, whether by an official audit, or getting a second opinion about your current financial health, is the best way to ensure quality control and that systems are in check.
- FINANCIAL HEALTH – During audits, companies often find out their bookkeeping is completely in order or in total disarray. I recently took over an account that underwent an audit. The CEO couldn’t figure out why they were always in the red, although their sales were thru the roof. Turns out the billing department had billed, but not collected on dozens of clients. The audit helped to show that process wasn’t completed. Now that Brigade Bookkeeping is at the helm, we are making sure all invoices are sent out and fees collected.
So see, the “A” word isn’t that bad after all. Audits are good things and ensure your bookkeeper has your company’s finances in order. If you’re ever in doubt about that or want a second opinion, e-mail me or call anyone on the Brigade Bookkeeping team. We are happy to have our books audited because we pride ourselves on accuracy and honesty, and when it comes to your money, what more could you ask for!
