Nowadays, most aspiring business leaders and up-and-coming entrepreneurs are solely concerned with the idea of coming up with the next big thing, introducing a new industry standard, and shifting the public gaze onto their products and services. And while aggressiveness and a risk-taker attitude are necessary for establishing a foothold in the markets, focusing on a fleeting vision without paying mind to the supporting structure is counterproductive.
Yes, there are merits to considering how your business can integrate with Meta’s latest AI developments or eyeing key partnerships with meaningful suppliers. Still, the primary business infrastructure and framework should come first for any new startup. So, before you decide on further business expansion or implement another drastic change in operations, we strongly recommend reducing any internal business risks as your priority, specifically your internal audit functions and overall financial management.
You Can’t Support Rapid Growth Without Efficient Internal Controls
We understand that some people might strongly agree with the idea of putting business growth on the back burner. Given the many success stories being told across business circles, others might label it a misrepresentation of good business thinking. However, there’s never a guarantee that a brand-new company will instantly outshine the competition. On the off chance it happens, inefficient internal controls can support no rapid growth.
At the end of the day, even the luckiest entrepreneurs can fail to back their ideas without enough investment in the right areas, and a strong grasp on your finances and internal audit should be a prime concern.
Always Value Audit Evidence and Source Documents
Firstly, when it comes to improving your internal audit department, one basic principle that can transform your financial management evaluation is simply keeping a good track of your audit evidence and the relevant source documents. Sure, you can implement different quality assurance programs, but a great place to start for a business startup is understanding the value of working papers.
Maintain a Firm Grasp on Your Audit Trail
Industries demand different standards and processes, and the nature of your business could either offer a relatively easy audit trail to follow or one that’s filled with complex transactions. So, for any entrepreneurs still in the grassroots stage of their business idea, we strongly recommend maintaining a firm grasp on where the money goes and comes from, securing copies of receipts, and receiving reports to name a few.
Seek Reliable Third-party Services
Who you choose to conduct business with directly influences your financial management concerns. While availing of third-party services is a fairly common practice, always confirm their professional history and reliability. In audit engagements, your internal audit department will often need external procedures to assert the existence of transactions, and having a substandard company working with you could introduce unnecessary problems.
Consult With Your Management Specialists
Internal audit departments are excellent with numbers, but sometimes transactions can be a lot more complex and require the help of a different specialist. As a result, having skilled people and relevant experts on demand is key to reinforcing your audit functions, like expanding your legal department or working with professional process servers. Of course, it may be expensive to strengthen all functions, so choose those equipped only with significant and high-value items.
Always Cooperate In Audit Engagements
The proficiency of your internal audit department is also reflected in your ability to cooperate with independent auditors during your annual audit engagements. Thus, prioritize collaboration to reduce the risk of inconsistencies and highlight potential errors that may have slipped past your internal control measures. Specifically, it is best to conduct period meetings and discussions with the audit team and provide full access to all necessary working papers.
Conduct Periodic Meetings and Discussions
Communication between those charged with governance, management personnel, and external auditors is essential for audit engagements to happen smoothly. So, instead of waiting for questions and explanations to come up abruptly, be proactive and conduct periodic meetings to facilitate any misunderstandings. In doing so, all details can be immediately discussed and looked over efficiently.
Full Access to Working Papers
Audit engagements will always fall back onto the available audit evidence. Full access to working papers is essential to gain sufficient and appropriate information to reduce risk to an acceptably low level. Some companies struggle with their documents, end up denying external confirmation procedures, and increase the risk of misstatement, so try your best to avoid these pitfalls.
Innovation Is Driven by Good Finances
Innovation and growth go hand in hand in any business sector. During these volatile times when geopolitical constraints adversely affect the market, sustainability in these processes becomes all the more important. But, in order to achieve any of these goals, good finances supported by a robust internal audit department will always come first.