An accounting audit is the process of examining a company’s entire financial situation, with an emphasis on ensuring compliance with relevant reporting standards, and promoting adequate cash audit of financial statements pdf policies and internal controls. In most countries, regular audits by outside firms are required for publicly traded corporations. In contrast, small businesses are typically not subject to as rigorous a set of reporting standards and controls and therefore are often not subject to mandatory audits. Learning how to perform a basic internal accounting audit on your own small business can provide you with a comprehensive understanding of your company’s financial strengths and weaknesses.
Quite simply, financial audits exist to ensure that your business’s financial information is “true and fair”. For small businesses, the main concern is that all expenses and revenues are accurate so that the IRS knows exactly the financial status of the business and can confirm all deductions are valid.
Learn the reasons for a financial audit. There are several reasons and benefits to regularly audit your finances.
CPA to do a systematic overview of your finances. Financial audits make sure all legal and tax rules are being complied with, which can prevent an audit from the IRS, or different legal issues that can arise when fraudulent or incorrect information is presented to the public or investors.
They can also provide education to the business owner about how their business is running and how it can be improved. Prevent your small business from triggering an IRS audit. A basic accounting audit of your business can be an effective way to prevent yourself from receiving an IRS audit, which can be stressful and time consuming.