How Often Should Your California Business Perform Internal Audits?
How often should your California business perform internal audits? Roseville certified tax accountants break down financial reviews and other types of internal audits that businesses should run in California.
Internal audits are an essential part of any business. They keep employees on their toes about the processes that are used for particular tasks and opens up a dialogue about how to continue to improve how the company operates. Internal audits can also help you address problem areas in your business before you are surprised with an external audit from a regulatory agency. If your business needs assistance performing an internal audit, you should consult with an experienced Roseville internal audit accountant. At Cook CPA Group, our team of accountants is invested in providing you with the services you need to keep your company operating with great efficiency. We are here to explain how often you should perform an internal audit for your California business.
When Are Internal Audits Needed?
The purpose of an internal audit is to assess the rules and procedures that are used to operate a company. These internal controls are not only used to remain compliant with various regulations from state and government agencies but also to ensure that company assets are not misappropriated for fraudulent activities.
Before you can determine how often you need to perform an internal audit for your business, you should first identify the areas of your business that need to be audited. For example, if you operate a business that requires product manufacturing, you want to ensure the methods used are not creating defective products. Determine the complexity of a certain department, and that will help you discern how often you may need to conduct an internal audit.
Once you identify how often a certain department needs to perform an internal audit, you should make a structured schedule to ensure the audits are routinely conducted. Creating an audit calendar will ensure company goals are met. Additionally, having an audit calendar allows a particular department to have documents and other necessary items prepared in anticipation for the audit. This should allow an audit to be completed without several delays or issues.
Once an internal audit is complete, the result of the audit should be shared with the managers of the company and evaluated. This can help a business determine which processes are working as intended and which processes require improvement. For example, if a human resources department is frequently having payroll issues, this is a problem that should be addressed immediately.
Types of Internal Audits
An internal audit can be conducted to address several different issues in a business from tax audits to 401(k) audits. You should take an internal audit seriously to avoid being dragged into an external audit due to inefficient or fraudulent practices.
Internal audits can be aimed at a number of internal controls that are vital to the way that your business performs. The following is a list of processes that an internal audit may cover.
Financial reviews assess the veracity of accounting practices and financial statements. Financial reviews are utilized for many different reasons. For example, it can track the financial activity of a certain department and ensure that those numbers are accurately depicted in financial reports.
If you run a public company, financial reviews are essential to keep stakeholders, employees, investors, customers, and various other parties happy. It is dangerous to publish financial information without conducting a thorough audit that supports your financial statement.
Depending on the type of industry your business is a part of, you may need to be compliant with a wide range of California regulations and possibly federal regulations. Our firm can work with the managers of your business to determine how to remain compliant with regulations while working to improve inefficient processes. The last scenario you want to be faced with is an unexpected external audit due to poor management.
Review of Tax-Related Issues
It is important to stay abreast of constant changes to tax laws in California and the United States. If your business operates in an industry where tax fraud is a regular occurrence, having an audit performed routinely can help you avoid other serious issues later on.
This is not a complete list. There are various other internal controls that audits are designed to assess and improve.
Our California Certified Public Accountants are Offering Free Consultations for Your Business
If you wish to address an accounting issue with your business, you should contact an experienced California certified public accountant. At Cook CPA Group, we are dedicated to helping your business improve internal controls to make your business run as smooth as possible. Our team of accountants possesses extensive experience in performing internal audits, and we are prepared to represent you. To schedule a free consultation to discuss our internal auditing services, call Cook CPA Group at (916) 432-2218, or contact us online.