Isadora Teich

10/14/2022
Philadelphia, PA
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How to Conduct a Company Audit

Whether you’re a startup or a small business, taking the time to conduct a company audit is a critical way to ensure that your operations are running smoothly and efficiently.

An audit can also help you identify areas of improvement and make necessary changes to keep your business on track.

Not sure where to start? This blog post will give you a step-by-step guide on how to conduct a company audit. Let’s get started!

First Define the Scope of the Audit

The first step in conducting a company audit is to define the scope of the audit. This means identifying which areas of the business will be included in the audit and which will be excluded.

For example, if you’re auditing your marketing department, you would want to include everything from budgeting to campaigns to results tracking. On the other hand, if you’re auditing your finance department, you would want to focus on areas like accounting, compliance, and payroll.

First, you need to determine what exactly about your business needs an audit. If you are a one or two person operation, figuring this out is far more simple than if you are a larger operation with various departments.

Take a close look at your business and decide what areas need improvement. Once you do that, you can begin to improve them!

How to Define the Scope of the Audit

So, how exactly do you find out what needs to be changed? There are a few ways to do this. Some apply to businesses of any size and others are more specific.

All businesses start the process by gathering information and documents. This step is crucial because it will determine the accuracy of your audit.

It is critical that, as the operator of a business, you keep clear documentation and keep records. On one hand, it is necessary for tax purposes. If you do not, you can land in real legal trouble.

So, if you do not currently have extensive documentation, it is time to start!

Beyond keeping accurate records of income and expenditure for tax reasons, it is simply important information for any business owner to have.

If you do not know how much you earn and how much you spend, it is impossible to run a successful business that can scale and stand the test of time. Also, beyond financial data, there is a lot of other data that you can record and keep track of.

For your audit, make sure to collect data from all relevant sources, including financial statements, employee records, customer feedback, sales reports, etc.

Once you have all the information and documents you need, you can move forward!

Conduct Interviews

In addition to gathering information and documents, another important step in conducting a company audit is conducting interviews with employees.

Of course, this only applies to larger small businesses and startups. If you do not have any employees, skip to the next section!

Interviewing employees will help you get a better understanding of how employees do their jobs and identify any potential issues or problems.

Make sure to interview employees from all levels of the organization, from front-line staff to upper management.

As an organization grows in complexity, more and more problems can arise. It is important to stay in touch with employees throughout your organization so any small issues can be corrected early before they have the potential to become larger problems.

A Look At Spending

Most companies, regardless of size, could benefit from doing an audit of their spending.

What are they spending on? And why? Are they seeing the returns of that spending? If you want to take a look specifically at cost-cutting tips for small businesses, take a look at our blog post on the subject:

There are numerous places where costs can sneak up on you when it comes to running your business. This is why it can be helpful to conduct a company audit every so often.

In business, these things are often called “discretionary expenses” or “fat.” These are non-essential things that your business pays for.

If you can’t think of any off of the bat, here is something you can do. Write down the mission of your business. Then, write down only exactly what you need to make that happen.

Our founder Joshua H. Davidson recommends:

Conduct an audit on company resources regularly. For example, many software platforms necessary to running your business have different costs based on tier, available features and usage. If your business does not actually need all the bells and whistles, don’t pay for them.

Especially when it comes to subscription-based software or other digital products, these costs can add up and potentially cost your business thousands and thousands a year.

If they add value to your business or are critical to its running, they are worthwhile. If they do not, that is thousands you are throwing away.

Here is another instance where talking to employees, if you have them, is important. You don’t want to spend money on digital processes that make their lives harder or they don’t actually need or use.

The Final Steps

After gathering all the information and conducting all the interviews, it’s time for the final step: reviewing everything and assessing your findings.

This is where you’ll analyze all the data you’ve collected and identify any areas of improvement or concern. Once you’ve done that, you can put together a report with your findings and recommendations for the next steps.

You want to make sure you keep clear documentation of your results and the steps that you are going to take to make improvements. This is important for a few key reasons.

  1. It will help keep you accountable, so you know exactly what you plan to do.
  2. If your improvements are successful, you will know exactly what you need to do in the future should certain issues arise again.
  3. If they are not successful, you know exactly what you have already tried and can try other things without wasting time repeating the same mistakes.
  4. In some cases, businesses look for outside help from consultants. If you ever do this, having clear documentation to show them will better empower them to help you.

General Tips For Conducting A Successful Audit

It can be difficult to know when to start when you think it’s time to conduct a company audit. One big obstacle is the mindset that many have around this practice. Some consider it a sign of defeat to admit that things are not going as well as they could.

Many people do not like to admit when they have made mistakes, and conducting an audit can feel like admitting failure.

This is the wrong approach. After all, entrepreneurship is a process of learning and adapting. Even successful businesses can benefit from taking a clear look at their processes, seeing what can be improved, and making changes.

This has nothing at all to do with pride, and everything with making the most intelligent choices you can, so your startup or small business can thrive.

Final Thoughts on How to Conduct a Company Audit

Conducting a company audit can be an important step in understanding your business and where you may need to make changes.

The process of gathering information, interviewing employees, reviewing subscriptions, and seeing if you can cut extra spending can seem daunting.

However, by creating clear documentation of your findings, you can make the transition smoother for everyone involved.

What do you think? Comment below.

Since 2009, we have helped create 400+ next-generation apps for startups, Fortune 500s, growing businesses, and non-profits from around the globe. Think Partner, Not Agency.

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