Business Audit Checklist
Audit Checklist: As a business owner, everyone faces dozens of duties and responsibilities. It is always difficult finding the right resources, ‘money and time’ to succeed. An audit gives a reality check for business owners helping them to make the right decisions at right time.
Whether it may be strengthening the fundamentals of business or its expansion, a business audit finds out the opportunities. An organization has different associated aspects including Human Resource HR, Information Security, Compliance, Finance.
On certain levels of business growth, these aspects provide information if expected growth is achieved at all levels. This is where the business audit checklist plays a vital role.
Without a parallel growth in every parameter, it is undoubtedly a hindrance to the progress of business in the future. On top of that, it helps forecast if an organization has enough resources to take the business into the next level of growth, in terms of time, money, and assets.
These audits are equally important for all organizations. Therefore, it is important to evaluate the evidence and map it with the standards of an audit.
As it requires a timely check of these audits to get facts and figures at regular intervals; it is better to develop a checklist of these audits for a business.
Being able to not miss out on any of these audits provides ways to reduce business risks, upgrade governance processes, and guarantee the success of organizational goals and objectives.
The difficulties in managing everyday tasks and being able to cope with regular auditing of different involved sections on businesses; make its utmost importance to have a business audit checklist for an organization.
Business Audit Checklist
Although the business audit checklist seems to make things complicated, it is a totally different case. Most of the time auditors get stuck when the data is unavailable for different areas of an organization. But as a business works through different audits of a checklist, it helps make auditing simple and easier even for new auditors.
This is because the organization has already worked through these checklists and has available resources to find new facts and figures to improve and include as a next goal or objectives of the organization. This makes the process more systematic to use and follow.
The checklist is normally an audit list that aims to help the auditor review and examine the business management system of a company. It is a specific tool and can be used as an additional guide when planning for the auditing procedure.
Strategic Business Planning Audit
It is a uniform and continuously developing audit process for governing a company’s long-term objectives. It also facilitates in developing or selecting the best approaches for the accomplishment of those objectives.
This audit is carried out to set the plans for a business in the future. Furthermore, it configures a plan of actions for organizational growth. This audit process draws up a route map for leading the company to eventually succeed in a competitive market.
Auditing strategic planning allows the auditor to get a vision of the company’s top-level goals and expectations and then compare the status of the goals and objectives with the business plans.
Organizational Structure Audit
Every organization operates on a certain structure. They establish a distinct hierarchy within an organization. It is important to distinguish between hierarchy levels for smooth operation. Therefore, it is important and needed for a business of all shapes and sizes.
A good organizational structure in business describes each employee’s job and how it fits within the overall system. The organizational structure simply lays out who does what, so the company can meet its goals and objectives. This structure can change regularly along with the growth of a business.
An Organization Structure Audit (OSA) is a process of documenting, measuring, and evaluating the organizational structure of an enterprise. Once an audit is completed and audit results are on hand, executives can identify specific organization’s issues, resolving which can shape profitability, productivity, and employee engagement.
Finance and Accounting Audit
Funds are an important factor to keep business processes running. Financial and accounting audit helps to keep track of the financial position of a business firm. Further, it provides an instance of achievement by an organization during a certain period. Having strong financial positioning creates funds for the expansion of business. Therefore, it needs to be on a business audit checklist without any doubt.
HR Management Audit
A Human Resource Audit (or HR Audit) is a systematic process for evaluating existing human resource practices, processes, reports, and systems. Keeping up the performance of an organization involves making a business workforce or employees happy and satisfied. Nevertheless, it requires compliance with the human resource or labor law of a country or community.
This audit assists in the evaluation of human resources regularly to help companies understand their position regarding legal compliance, management actions, and best employment management practices and do so under the protection of the Attorney-Client Privilege.
A company should operate under required government permits with all necessary business licenses. Now a company should maintain a tax calendar to monitor dates to file various tax reports along with the payments made.
An authorized person should take responsibility for managing all tax reports and payments keeping adequate payroll records. Tax audit supports the government in collecting suitable tax revenue essential for budget, maintaining economic and financial order and stability.
This makes it an important field to keep an eye on by the government. Hence, compliance with the tax audit needs to be a priority and should be on a business audit checklist.
This audit is the basis for all business success. Budgeting is most important in growing a business because it helps to control costs, track expenses, and be economical. Subsequently, it helps to make better financial decisions, prepare for emergencies, get out of debt, and stay focused on long-term financial goals.
To simplify, the budget audit usually checks out the problems in the process of budget making. Even though small, and medium enterprises may not focus on these audits, it is very important for large-scale organizations to have this on their business audit checklist.
Product and Services Audit
The most important topic to secure business success is the intelligent management of price structure. Reducing costs brings an increase in revenue, the company’s net profits, and its profit margin. While reducing the price for products or services an organization also needs to be competitive in the market.
It is important to review or audit market prices, opportunities to increase the value of products and develop a brand through customer satisfaction. The market demand keeps changing with time and most of the time, the business that is first to react gets more benefits.
Hence, it needs to be a priority of identifying the right competition and right services to meet clients’ or customers’ needs and desires.
On top of an audit of products or services, there should not be any compromise with the quality of service. There should be an authorized purchasing division or team under the company’s policy to audit the quality of products purchased, their quantities, and the license of suppliers with the list of alternative vendors under proper purchase agreements. The audit can reveal fraud or negligent purchases when you review the approval process, vendor selection process, and quality assessment process.
The marketing audit is a structural analysis of a business’s marketing environment, objectives, strategies, and activities with a view to identifying key strategic issues problem areas, and opportunities. Its purpose is to sort through the resources and figure out whether the implemented strategies are working or not.
Marketing audit should not only be carried out in times of crisis, but should be performed periodically, at least once a year, and not only during a crisis. This will help in preventing market changes from catching a business off guard.
It is important to protect the business against possible risks which could wipe out the assets of a business. The workplace, customer, and employee safety including business security from different possible risks is a top priority for any organization. Business Continuity Plan (BCP) should be able to protect the organization from known and unknown risks through quicker disaster response and recovery.
Insurance can play a role to protect a business financially during a crisis but there are other risks that affect a business more than just financially. As stated by Murphy’s Law “Anything that can happen, will happen”. Therefore, finding risks and mitigating them is more important and no risks can be neglected by a progressive business. This is a very important audit that should be in a bucket of checklists for every organization.
Information System/ Information Technology Audit
An information system (IS) audit or information technology (IT) audit is an examination of the controls within an entity’s information technology infrastructure. An information system audit is a means to monitor and appraise the management of information, their activities, their adopted system whether inside a big or small organization.
Information technology audits determine whether IT controls protect corporate assets, ensure data integrity, and align with the business’s overall goals. The technology market is reaching new heights every day and success without proper use of technology is impossible today.
While implementing technology, confidentiality, integrity, and availability of data need to be ensured. Hence, the audit needs to be carried out by all organizations.
A compliance audit measures how an organization is performing against a set of business standards at the international, country, or community level. An ISO certification is an international standard for organizations that is in global acceptance. Compliance with recognized standards builds a trust of an organization with its customers.
Like ISO there are many standards that have been established at different levels to enhance customers’ data security and satisfaction by increasing the quality of products/ services.
Depending upon the type of business, there may be different sections to keep an eye on by an organization. There can be specific audits to perform other than the audits mentioned here. Having a bucket of audit checklists will keep an organization competitive and on top of everything and help strive towards success. After all, better decisions can arrive if an organization perceives through the smallest of issues.