Whereas a good audit will be able to harness the hidden value of the accounts, such that it will be able to uncover the most costly accounting mistakes, at the same time examines several aspects of the business such as the environment it operates in, its risks and its operational deficiencies.
SMEs need to view auditing as presenting the financial health of the company. Companies undergo audit for various reasons such as accountability to shareholders, securing bank loans or even to participate in tenders. But for most companies, it is to fulfil a statutory requirement.
The auditors’ focus should be on audit procedures, instead of reconciling ledgers to the trial balance, which should be handled by the accounts team. To get the most of an audit, both the SME and the auditor need to communicate and work very closely.
In a nutshell, SMEs need:
Support from the top
A good backing from the senior management team will greatly help to convince everyone that good accounting is important.
Not prioritising accounting leads may cause lapses being unaddressed and by the time anyone realises, it will be too late. Delegating a senior manager to look into this will at least provide some form of assurance that timely actions will be taken.
Consider a reasonable budget for a qualified staff to manage the company’s accounts. In the case of smaller companies, they may consider seeking assistance from third party accountancy firms.
Time to prepare
Senior management should allocate some time to review the accounts before audit, to make sure that the audit process is efficient and hence maximising its benefits.
Good accounting and auditing can boost any SME’s productivity which can result in better sleep for you.