By conducting audits regularly, you can improve the accuracy and quality of your company’s records. An audit usually involves reviewing internal receipts as well as bank statements to find mistakes. Some errors involve careless clerical mistakes and can be fixed quickly, while others are intentional or fraudulent and might cause significant damage.
Identify audit objectives, such as to discover unintentional errors or to repair areas that need improvement. Develop a general framework to describe a standard audit routine. For example, create an audit checklist that describes reporting methods in detail.
Gather relevant documents, such as itemized lists of your expenses and recent bank statements. Establish a cutoff period, such as the end of the month, so that you can reconcile transactions within a specific period. Many transactions, such as deposits, transfers and withdrawals, do not clear immediately but require a few days before posting to your account.
Reconcile information so that your bank accounts reflect actual transactions. Avoid tackling data from long periods of time because you are more likely to become overwhelmed. Separate data by subgroups so that instead of lumping information in a revenue account, you can distinguish categories like sales, interest income, and shipping reimbursements.
Store results in a safe, organized method so that you can retrieve information quickly if you need it, such as if the IRS audits your company. Avoid discarding proof of expenses (generally, for more than $75). To minimize the amount of paper you use, consider using an accounting software program (not just a spreadsheet or general ledger) and scanning your receipts.
Review state and federal legislation. For example, Congress passed the Sarbanes-Oxley Act in 2002, which changed many audit procedures. Stay current with IRS regulations and Federal Deposit Insurance Corporation (FDIC) limits so that you avoid depositing uninsured amounts of money.