Internal Audit Checklist For Small Business

Benefits of small business internal audits can be immense. They allow companies to strengthen processes, identify risks, and foster an accountability culture within their organization.

As part of any internal audit preparation effort, creating an audit plan is the initial step. An audit plan establishes its scope and sets expectations among management.

1. Review Financial Statements
Financial audits (also referred to as reviews) are essential components of running any successful business. An audit ensures that all your company’s books are in order and provides an accurate representation of its financial health – helping attract investors, keep banks happy, and make sure all taxes are paid correctly.

An internal financial audit involves reviewing budgets, income statements and cash flow statements as well as inspecting accounting records to make sure all necessary paperwork is available. Companies who regularly conduct internal audits with control checklists experience increased compliance with regulations as well as improved results from external audits. ISO 9001 certification also involves regular internal audits that include reviewing training manuals, testing procedures and employee certification histories for accuracy.

2. Review Operational Processes
An internal audit can assist a small business in double-checking entries in its accounts to verify transactions have actually taken place, as well as identify any noncompliance issues to allow corrective measures without engaging regulatory bodies.

This review will also assess management processes such as creating an effective mission statement, annual budget and employee evaluation policies. Furthermore, this analysis will establish whether managers have sufficient authority to approve expenses and sales contracts.

Reevaluating processes may seem bureaucratic at first glance, but in fact it can free up team members to be more flexible and agile at managing the business frontline. Preventative controls like financial software that requires manager approval before purchases over $500 can also help.

3. Review Information Technology
An internal IT audit is one way to ensure you’re taking all the steps needed to protect your information from hackers. Auditors typically examine certification history and training records as well as make sure procedures exist for identifying and reporting risks.

Internal auditing can be a vital tool for small business owners looking to strengthen their operations. Not only can an internal audit ensure compliance with regulations, but it can also identify areas for process improvements or pinpoint weaknesses before they become more serious issues.

4. Review Human Resources
Small business owners may fear audits as something to avoid at all costs, but conducting internal audits regularly can help ensure your books are accurate and any problems can be identified before becoming costly. While IRS audits should always be handled professionally (for instance by hiring an experienced bookkeeper or accountant), regular internal audits can help make sure all is in order and any problems found before becoming serious issues.

HR audits involve reviewing policies related to equal opportunity, employment practices, workplace safety and any issues that impact employees. An HR professional should be able to assist your company with these audits on an as-needed basis; hiring one may help your business thrive as well.

5. Review Customer Service
Your small business, whether it’s in services or physical products sales, needs an internal control system in order to lower risks associated with fraud, theft and errors. A comprehensive internal audit – with its review section – can identify procedures which aren’t working effectively and give you information on how you can improve them.

An audit checklist can assist your audit team in regularly evaluating and improving company controls, giving them a distinct advantage during external audits. Furthermore, an audit checklist will increase compliance among your organization – giving you more assurance of passing future external audits successfully while making it simpler to defend any potential non-compliance issues with regulators should any arise.