When was the last time you analyzed the accounting procedures and controls of your business? Did you analyze it yourself, or did you have an external auditor take a look? Believe it or not, there are actually several great reasons for getting an external analysis. While it may initially cost you some time, the results you’ll see from improving the way your business functions are beyond worth it. Read the rest of this article to figure out why you might want an external audit!
Internal Controls Can Have Flaws
Think about the internal controls of your business. How long have they been in place? The entire time you’ve been in business? How much has changed since you first started your business?
If you’re a fairly newer business, this might not apply to you, but if you’ve been in business for a few years, we’re talking to you! The biggest problem with never analyzing your internal controls is that you’ll never know if they are flawed.
If you’ve used the same internal controls for years and never noticed any changes, why would you think anything is going wrong? It can be easy to overlook errors that are in fact caused by poor internal controls, attributing them to something else entirely.
Yes, that means that you might have been using flawed internal controls the entire time you’ve been in business. And how would you even know to check in the first place?
This is why an external opinion is fantastic. Not only is it an unbiased set of eyes looking at your controls, but it is also someone that has their own criteria used to evaluate your controls. While you might be focused on security and accuracy, someone else might look at reliability and speed.
When you use the same internal controls for a prolonged period, your accounting department can stagnate. It becomes much easier to overlook and forget about controls, which can certainly cause issues further down the road.
Procedures Can Be Outdated
While the procedures you set in place may have been appropriate for your business years ago, they may no longer be relevant or appropriate now. Your business is likely radically different from how it was when you first started.
Even if your business hasn’t changed much, that doesn’t mean that the rest of the world stayed the same. Technology is the biggest cause of change, and this is no different when it comes to procedures in the workplace.
Some accounting procedures would have made sense to do manually in the past, but now it is far more efficient to have software take care of it. Anytime you’re dealing with information and technology, you have to keep up with current trends to ensure your procedures stay relevant.
Another thing to consider are any changes made to actual laws surrounding accounting. While you may have been able to claim and file transactions or expenses one way in the past, it may not be the correct way to handle it now. Having an experienced set of eyes look at your procedures is another way to see if you’re still in compliance.
Benefits of an External Opinion
Now that you understand why the accounting procedures and controls of your business might need an external analysis, you’ll want to know how you’ll benefit. You’re definitely in luck, because an external opinion is rife with benefits!
Here are some great results you’ll see after getting an external opinion of the accounting procedures and controls of your business:
- Relevance – With a second set of eyes, you can be sure that your processes and controls are relevant. It is very easy to get caught up in the everyday hustle and bustle of business, but before you know it, several years can pass by. One of the last things on your mind is sure to be your accounting processes and controls. It can be very easy to forget to ensure how you do something is the best way to do it. It is certainly easier to not think about this and just work, but it hurts the overall potential of your business. If you want to grow, you must adapt to relevant processes and controls.
- Accuracy – One of the biggest benefits of an external opinion is ensuring that you’re doing things right. Are there mistakes being made because a process is misunderstood? Is a control being skipped altogether? Having someone sit back and actually watch your business function is a perfect way of seeing where things actually go wrong.
- Effectiveness – Another huge reason for an external opinion is to see whether or not your processes and controls are effective. The reason why you originally instituted your accounting processes and controls was so that there was an easy way of understanding what needs to be done. Just because something technically works doesn’t mean that it is actually effective. Unbiased eyes are great for telling you without emotion whether or not your controls are actually identifying errors or not.
Professional Accounting Advice
If you’ve managed to start and run a successful business, then you certainly know what you’re doing. You understand the hard work, dedication, and sacrifice that goes into making a business flourish. But if you’ve never taken a second look at your accounting processes and controls, you might be doing yourself a disservice!
While your original procedures and controls may have been appropriate for when you first started, surely your industry and technology have changed so much that there is probably a better way of doing things. If you’re going to do something as a business, don’t you want to make sure you’re doing it in the most optimal way possible?
When it comes to accounting processes and controls, it can be difficult to see what is going wrong when you’re directly involved with them. Getting an external opinion is an excellent way of ensuring that your processes and controls are relevant, accurate, and effective!
Opting for an external audit may seem like a hassle, but it is an investment that will certainly be worth it down the road. If you want an opinion from experienced accounting experts, contact the professional accountants at the Felde CPA Group! With several years of experience, they know exactly what goes into developing strong accounting processes and controls. They can use that expertise to help ensure your business is operating at maximum efficiency!