Running a business and maintaining your financial accounts on a regular basis can be a difficult task. Doing your own accounting has its own pros and cons. With too many responsibilities in your hands, mistakes are bound to happen. Such mistakes create a problem for you during an annual audit. Here is an audit preparation checklist you should keep in mind when there’s an audit for your small business accounting Edmonton.
Update Your Books Daily
You do not want to sit down to tally all your accounts before the visit of an auditor. In any business, monetary transactions happen on a daily basis. Make sure to keep a record of the same in your books of account on a regular basis. If you keep this for later, you might end up forgetting some transactions. Also, make sure your balance sheet and trial balance are tallied as that is the first thing an auditor will ask for.
Check for Compliances
Before an auditor comes and has a look at your books of account, make sure you are following proper compliances. Identify your company under which legal statutory compliance it falls and ensures that you follow them duly. This will make it easier for the auditor to check your accounts and there will be less scope of any incorrect rates applied to your business transactions.
Organize Your Receipts
When an auditor checks your books of account, they may ask for receipts of incomes and expenses to cross-check the entries. Make sure you have an organized folder in which all your receipts are arranged chronologically for the auditor to go through. If you have a software system to track your receipts, make it easily accessible to the auditor.
Be Ready to Answer All Questions
There are certain questions that an auditor will ask. When going through your books of account, the auditor may look at some significant changes that have taken place compared to previous year’s data and may ask you questions regarding the same. The other question may be if all the entries are accurate and if these entries have tangible proofs such as receipts. Next, he might ask about your tax compliance. Be ready with all the answers to such questions.
Perform Regular Reconciliations
A reconciliation of an account refers to documenting that the account balance is correct. It makes use of two sets of entries to ensure that the figure tallies. Basically, it justifies that money removed from the account matches the amount that has been spent. Do not wait for the end of the year to reconcile your accounts. Try to do it at least on a monthly basis as it gives you a better understanding of the items to be reconciled
With so many things to keep in mind, it is common for people to miss out on a thing or two. To avoid this, you could take professional help to conduct an internal financial statement audit to avoid discrepancies. Having an internal audit conducted makes your books of account ready for the final audit. Take professional help wherever necessary. To get assistance in maintaining your books of accounts, reach out to the small business accounting Edmonton professionals.