An audit is an official examination of a business, individual, product, process or system. Financial audits are perhaps the most well-known, as financial audits are conducted for the accounting processes of individuals and businesses every day. A business owner or manager might also conduct a complete business audit that can encompass an examination of management procedures or employee satisfaction. A small business audit may also assess business assets and processes from inventory management to marketing strategies and shipping practices.
The management audit deals with the fundamentals of the business such as the establishment of a business mission statement and verification that the mission statement is being consistently honored through business practices. Part of the audit should also examine the processes for keeping track of customer databases, sales and budget enforcement. The management audit typically takes stock of company personnel as well. The audit may include one on one interviews with employees and managers to verify everyone understands the job expectations and feel adequately trained in job positions. Small business audits should also verify that employees feel comfortable with supervisors and management and that they have a reliable means to contribute ideas and methods for job improvement.
The operations portion of a small business audit delves deep into the operational structure of a business and includes a look at the company's relationship with suppliers and vendors in addition to the handling of inventory, payments and delivery of services. The audit will look at whether the business has a plan in place for timely receiving, processing and shipping of inventory and supplies. An examination of small business operations should also verify that the company maintains safety records and meets required OSHA standards set forth by the Occupational Safety and Health Administration regarding employee safety and the proper handling of equipment and materials. The audit may also look into whether the business has a policy regarding proper disposal of waste materials and reducing the environmental impact of the business.
The financial portion of a small business audit examines the general bookkeeping and accounting practices for the business. During the audit, managers and auditors may verify the totals of business assets such as equipment and property values, cash, inventory values, stocks and outstanding accounts payable and accounts receivable. A financial examination also involves review of current and future financial plans as well as loan proposals, tax documentation and the budgeting practices in place to help control expenses and fuel business growth.