When Does Your Company Need an Audit?
It may not be necessary to have a company's accounting system audited every single year, but as a business owner, you want to take advantage of this service as often as you deem necessary. It's good to find accounting errors as soon as they arise and to ensure you know if your money is being spent properly; an audit can also better prepare you for making certain business decisions. Note when your company may need an audit by a company like Boyd & Associates and why.
1. When you're often absent from the company
If you live in a different country than where the business operates or if you're often away from the business, you may want to have it audited frequently. Someone may be less tempted to mismanage funds when they know the owner is very present and it's assumed they're checking the books regularly. However, if you are retired and don't run the business yourself, living in a remote area, etc., the temptation to misappropriate funds may be much stronger for some employees. Having the books and accounting system audited regularly can ensure the business is being managed as it should be while you're away.
2. When considering a sale of the business
An audit of your finances can ensure that you price the business properly and can also help you to prepare a profit and loss statement and other paperwork needed for a sale. You may even decide not to sell the business if you see that profit margins are not what you expected, if costs to run the business are going down so that it's more profitable than you thought, and so on. An audit can be done for the same reason when considering taking your business public and selling shares of stock.
3. When sales or other figures are not what you expect
There is no guarantee for any business when it comes to sales numbers, profit margin, etc., but most business owners have an idea of these numbers and what to expect. If you notice that your sales numbers are not what they should be or your profit margin is smaller than expected, you might have an inventory and audit done at the same time. This can ensure that nothing is being mismanaged or misappropriated, and can also tell you if you need to make adjustments in certain areas of spending. An audit can note what expenses are being claimed by salespersons and others, or otherwise give you an idea of what costs may be eating into your profit margin overall.
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