BUSINESS AUDIT

What is Business Audit?

An audit examines your business's financial records to verify they are accurate. This is done through a systematic review of your transactions. Audits look at things like your financial statements and accounting books for small business. Many businesses have routine audits once per year.
Audits can help you spot problems within your business. They can find errors in your numbers, which can help you with decision making. In the long term, a company audit can help you get your small business on track and boost your business bottom line.

Types of Business Audit:-

1. Internal Audit- An internal audit is initiated by you and conducted by someone within your business. Internal audit to prevent financial mistakes and check in on company goals. Internal audits don’t just look at your business’s finances. They can examine business operations and management to make sure everything is functioning efficiently.
2. External Audit- An external audit is performed by a third party, like an insurance company, local tax agency, or the IRS. External auditors must follow auditing standards known as Generally Accepted Auditing Standards (GAAS).
3. IRS Audit- An IRS audit might take place due to a discrepancy on your small business tax return. Or, your business might randomly be selected for an audit. IRS audits are conducted either by mail or through in-person interviews.

Benefits of Business Audit:-

1. Send a signal to investors and lenders – If you’re looking to raise capital for your business, having audited financial statements can boost confidence of investors and lenders in your company.
2. Root out productivity killers – Doing an audit can help you spot fraud, employee theft, and operating inefficiencies. In turn, that can help you to achieve profitability or increase your profit margin.
3. Make tax time easier –If you’ve self-audited your financial statements, filing small business taxes at year end will be a breeze. You also make things easier for your accountant, and save on the money that you have to pay them.
4. Receive certifications – Certain business certifications, like ISO 9001 certification, require regular business audits. These certifications can increase business revenue and lower operating costs.

List of Business Audit Services provided by legal Convoy:-

1. Preparation of Financial Statements and Reports in accordance with I.F.R.S standards
2. Audit Reports with International Standards on Auditing I.S.A
3. Companies Limited Reviews
4. Due Diligence
5. Business Fraud Investigations and Dispute Services

Documents required for Business Audit:-

1. Bank statements, cancelled checks, and receipts- As a rule, don't discard any business-related cancelled checks, invoices, or sales slips. If you paid some expenses with cash, keep the paperwork (handwritten notes, notebooks, receipts, or petty cash vouchers) showing the payments.

2. Electronic records- Bank and charge card (Visa, MasterCard, American Express) statements are accepted by the IRS as proof of payment. They must show the name, the date, the amount, and the address of the payee. You will be required to present bank records from professional accounts (and possibly personal accounts).

3. Books and records- If you keep records with only a check book and cash register tapes, so be it. If you maintain more formal records such as ledgers and journals, the auditor is entitled to see them. If your data is on a computer, the auditor will want to see a printout.

4. Appointment books, logs, and diaries- Businesses that offer services typically track activities and expenses using calendars, business diaries, appointment books, and logs. An entry in a business diary helps justify an expense to an auditor as long as it appears to be reasonable.

5. Records for certain equipment- Additionally, you must keep special records for certain equipment, called listed property, that is often used for both business and personal purposes. Cell phones and vehicles used for both business and pleasure are designated as listed property.

6. Auto records- A vehicle can be listed property if it's used for personal purposes as well as business. So business use of your personal auto requires detailed records showing the work use portion.

7. Travel and business-related meals- By law, out-of-town business travel requires greater record keeping than most other expenses. You must have a written record of the specific business purpose of the travel and the costs incurred, as well as receipts.