How Does Accountant Audit a Small Business?

For most Entrepreneurs, it is not easy to present the financial records to a third party for inspection.

For Small business owners

Small business owners don't have sufficient time to undergo an audit, or they may feel uncomfortable about their record-keeping processes. However, there are several advantages for small business owners in conducting an audit.

Need to Audit a small business

Auditing includes various methods. An independent person (either an individual or an organization) uses to inspect and scrutinize the books of accounts, records, and internal control of an organization and discover an opinion that the business is following all the necessary GAP (Generally Accepted Practices).

Auditing also provides to search for potential opportunities for improvement in the internal conduct of the organization. It focuses on looking for appropriate solutions for threats and risks in business.

Small business owners are responsible for maintaining books of accounts, monetary records, etc. that represent the business’s income and expenditure. If records are missing or incorrectly and falsely organized audits will become difficult.

When your small business is audited, an audit report is made and presented by an auditor with an opinion.

Auditors write their opinion whether the books of account and financial records are accurate and business is conducted truly and fairly. Auditors also include in their reports what they found during the conduct of the audit process. The report also presents the facts whether your financial records are accurate, missing, falsely represented, or inaccurate.

Accountant auditing a small business

The following points need to consider before conducting an audit:

Auditor performing an audit program must not be a part of the management of your small business, this is the reason an individual/ firm cannot be appointed as an auditor if:

• The person performing an audit is an employee/ member/ officer or relates to the management of your business or company.
• They are partners/ or relates with the business.
• If the accountant does not meet these criteria and holds a valid audit-practicing certificate issued by a recognized authority body, they may be appointed as the company auditor.

Accountant audits are not just for look business avoiding tax - An audit can be performed for every business.

There are several reasons why Accountants might choose to audit a business. 

• To look and find out about the omission of income in tax returns.
• To minimize the tax return mistakes.
• To find out whether there are any suppressed unprofitable years in books of account.
• Is Directors earn any profit falsely by making misrepresentations in financial records?
• While audit accountants help in revealing any big fluctuations in profits/expenses.

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