The 12 Days of Audit
Published December 22, 2016 7:12 PM
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Updated December 23, 2016 12:26 PM
1 Min Read
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No More Partridges, No More Pear Trees
Some people may think pear trees, a selection of holiday birds, and a representative sampling of the Medieval European workforce are what people want for the holidays – but the good folks at BKR International, which represents 160 independent accounting and business advisory firms in over 500 offices and 80 countries, suggests your clients might be better off with an audit or review of accounting and operations, instead.
“Regularly reviewing processes and procedures to identify weaknesses is a value-add and helps build trust between you and your client,” noted executive director Maureen Schwartz.
With that in mind, BKR International put together this seasonally appropriate set of 12 reasons your clients should consider an audit or review (to the tune of “The 12 Days of Christmas”).
“Regularly reviewing processes and procedures to identify weaknesses is a value-add and helps build trust between you and your client,” noted executive director Maureen Schwartz.
With that in mind, BKR International put together this seasonally appropriate set of 12 reasons your clients should consider an audit or review (to the tune of “The 12 Days of Christmas”).
Twelve Crooks in Prison
Learn from the mistakes of others. If you come across a story about an individual or business in your industry that is in the wrong, read it. Find out what happened to avoid letting the same thing happen to you.
Eleven Sanctions Stymied
Ordinary or gross negligence can result in penalties (or worse). Avoid negligence with proper controls and by outsourcing specialty tasks, such as payroll. Additional training for less experienced staff is also advised.
Ten Legal Changes
Accounting laws are always changing and some are left up to interpretation. Make time to understand new accounting and auditing standards, and create a plan for implementing and communicating any changes to relevant staff and clientele.
Nine New Findings
Haven’t had an audit in a while? Internal controls should be reviewed routinely to identify weaknesses and deficiencies. Findings will provide the cause, effect and recommendations for improvement.
Eight Hidden Payments
Accurate financial statements are a must. All disbursements should require authorization and specific policies, and procedures for handling cash disbursements should be in place. (See the next “Why” on the importance of segregation of duties.)
Seven Bribes in Billing
We all want to trust our employees, but segregation of duties exists to avoid fraud and error (e.g., bribes, tampering, etc.). Keep authorization, invoicing and payment processing separate to discourage any temptation for fraudulent activity.
Six Bogus Entries
Financial statements and records should be reviewed for misleading entries (or false information). If misleading entries are found, completeness and clarity should be sought in response to the entry.
Five Internal Controls
Without clean books, you can’t make good business decisions. Check for accounting errors – including errors of omission and commission – and ensure that proper controls are in place to minimize errors.
Four Comment Letters
If you receive an enforcement letter, respond immediately. Failure to do so could result in the freezing of assets or even criminal charges. Remember, ignoring the problem will not make it go away.
Three Acts of Fraud
If fraud is suspected, consider working with a forensic accounting specialist. They are specially trained to identify the resources required to support your case, should your dispute go to trial. Using their accounting and investigative knowledge, forensic accounting specialists are able to detect acts of fraud, violations, money laundering and much more.
Two Background Checks
Always, always, always perform a comprehensive background check including criminal and employment history. Verify education, professional licenses and certifications, too. Watch for a history of criminal convictions or acts of dishonesty when an individual is handling the accounting and financials.
And one unqualified report
Which is what every company wants for Christmas, right?
