A Deep Dive into Audits
Multiple choice time:
Your business got notice of an audit. The response?
a. Yell, and throw your valuables at the wall
b. Stare blankly in paralyzed fear.
c. Collapse in on yourself like a dying star
d. Smile, because you totally got this.
If you said D, you’re a liar. Audits rarely inspire thoughts of content. But there are ways to face them that will transform this traditionally painful process into an efficient and documented collaboration.
Whether it’s a tax or financial audit or even a financial review, you’ll find that technology such as digital payments (vendor ACH, EFTs, etc.) and bookkeeping automation (workflows, audit trails, etc.) can document and yield the necessary information to face—and ace—an audit.
How to prepare for an audit before it even happens
An auditor walks into your conference room. She’s looking for basic auditing information: bank statements, canceled checks, receipts, travel expenses, and appointment logs.
She’s greeted by massive piles of paper. You and your staff can’t find the specific documents she has requested.
Exactly what impression does this make?
Well, first off it’s a big red flag. No one likes jumping in the paper pool—it’s inefficient and cumbersome. Most importantly, if you aren’t organized, an auditor will suspect the worst. This first impression causes a drastic shift from neutral to: “You aren’t in control. You can’t find basic documentation and you probably have errors.”
A lack of records or poor recordkeeping can lead to other downfalls, as the IRS can penalize your company for this. It’s like poking an angry bear—you just don’t want to do it.
The best way to organize is to digitize. Bring in solutions such as QuickBooks Online, Xero, Netsuite, or Sage Intacct to handle your general finances. They’ll connect to your banking accounts and help with cash flow, categorizing expenses, reporting and more.
Accounting solutions act as terra firma for businesses. Your business will need additional accounting apps to supplement your main accounting solution and create an audit-friendly environment.
Consider these digital capabilities to combat audits:
- Digital payments such as ACH transfers or EFTs
- Electronic proof of payments such as canceled checks
- Travel or expense receipts and reimbursements
- Online document management
- Automated workflows that enforce the separation of duties
- Audit trails
- Auditor-level access
- Access to vendors, payment histories, contracts and more
- Digital (and documented) collaboration
- Permissions-based access, which means only those authorized to access the information can access it
How do these capabilities support audits?
It’s simple. They collect and organize activities such as bill payment and invoicing. They provide automated workflows and audit trails. Everything an auditor needs will be electronically organized and at their fingertips. No more hunting. No more paper cuts. No more doubt.
How do I implement these features?
Start with Bill.com. In addition to providing the above features, it:
- Integrates with accounting solutions such as QuickBooks, Xero, Netsuite, and Sage Intacct.
- Syncs with expense reporting apps such as Tallie or Expensify. A receipt can be scanned, logged and sent to Bill.com with other expenses for reimbursement.
- Integrates with solutions such as Hubdoc, which automatically gather and organize electronic documents.
- Allows you to provide an audit-level of access to the system. An auditor can log in from the office and quickly gather and review the necessary audit trails and documents (check images, EFT confirmations, date/time stamps and more.)
All of these features from Bill.com allow you to streamline and accelerate your audit.
Don’t forget this important audit resource
Technology greases the wheels of audits. It organizes, streamlines, tracks and secures pivotal accounting processes. But never neglect this key audit resource—your trusted accounting advisor.
Lean on them heavily. They’ve been through audits. They can help you understand your finances, create an audit strategy, identify questions before they arise, and coach you through the entire process.
It's time to ace your audits!