Business audit how it works and how to do

Aug 15, 2022

A procedure that ensures that a company’s internal processes are carried out with absolute transparency; business auditing has become an essential element in professional relationships, whether with employees, suppliers and customers Auditors in UAE!

The corporate audit, among other benefits, brings security to the company, since the measure allows all internal protocols to be followed to maintain quality, guarantee the survival of the organization and gain credibility in its segment.

In this article, you will know what it is, how it works and how to do a business audit!

What is business auditing?

Corporate auditing refers to the analysis of accounting operations to adapt them to the companies’ internal procedures to provide clarity, economy and security throughout the professional relationship circle: whether with customers, shareholders, suppliers and, above all, with customers.

During the corporate audit process, all internal controls (labor, tax and accounting) and the annual development of the company are evaluated, seeking any type of inconsistency in the recorded information and providing means for managers to create improvement measures.

After the analysis, the business auditor needs to prepare reports, giving his opinion on the current situation of the company’s internal processes. These reports indicate all the measures that must be taken so that the procedures are in accordance with the internal organizational policies.

An important point worth mentioning is that, generally, the corporate audit is conducted by an independent professional (auditor) who has no connection with the company. This precaution is intended to guarantee the impartiality of the analyzes and the accuracy of the reports delivered to the managers.

The purpose of the corporate audit is to point out possible errors that compromise the results of the company as a whole and that can even harm the level of satisfaction of the teams.

When is the business audit carried out?

Contrary to what everyone thinks, a business audit can be carried out at any time, not just when something goes wrong. In fact, the best time to do a business audit is just the opposite: when everything is going great!

By carrying out the business audit in the “fat cow” phase of the company, it is possible to ensure that the good phase has a longer duration and stability.

The manager can request that the corporate audit be carried out whenever he/she deems it necessary. In addition, it can determine which departments need to be audited most frequently.

An excellent way to understand when to carry out an audit is by talking to employees, as they deal daily with internal processes and know if legal and bureaucratic requirements are being carried out correctly.

What is the duration of an audit?

The duration of audits, whether internal (carried out by the employees themselves) or external (carried out by a company outside the organization) depends on the number of sectors that are covered by it, as well as the size of the company and the number and nature of legal proceedings. .

The greater the number of sectors and processes and the size of the companies, the longer the time required for the business audit to be completed.

It is not possible to immediately establish the deadline for the work of the auditors, as this varies according to the specific situation and its particularities.

However, it is possible to measure the average time required in some simpler cases.

For example, studies point out that an audit for labor purposes in a medium-sized company in which there is an analysis of documents and compliance with legal requirements by the organization takes about three months.

On the other hand, a study of the same type applied to a large company that has a greater number of sectors takes around six months to complete.

These studies will not always take months. In cases where they are promoted on specific processes or a single sector, they can be done in just one or a few weeks, without the need for availability of long periods.

Internal audit vs external audit

In the case of large companies, the need for corporate audits is much greater than in smaller companies. Most large companies have their own audit department made up of highly qualified professionals to carry out the task impartially. This is what we call internal auditing!

The external audit, on the other hand, is performed by a specialized company that is hired only at these times. In this type of audit, auditors look for errors or even fraud that could compromise the company’s financial health.

The information collected by the external auditor is, in general terms, sent to shareholders, financial institutions, among others, so that investments in the company are made safely.

As we mentioned at the beginning of this article, the corporate audit, when performed by an external auditor, guarantees the impartiality of the analysis and results in even more credibility for the company and its processes. Publicly traded companies are required to carry out the external audit by law.

What is the relationship between auditing and business management?

The business audit can bring numerous benefits to the organization, so that it is directly linked to the management of the company. This is because it is extremely important to identify which are the irregularities of the sectors, as well as to document all the relevant information that refers to these results.

This corporate audit is indicated for the identification of actions that can promote the improvement of the processes carried out in the company and the organizational climate.

It is possible that the relationship between the sectors, as well as the quality and deadline of the processes and even the relationship with consumers will be improved.

Measures aimed at correcting activities are appropriate. The promotion of this type of audit leads to the reduction of business risks and is essential for the management of the company.

The promotion of business auditing, therefore, is closely linked to the management of companies, as it allows new paths and solutions to be proposed, while hitherto unknown problems can be identified and measures taken to resolve them.

Another reason that demonstrates its importance for the management of companies is that the audit helps in the institutionalization of good practices, in the self-inspection of the company and in the creation of tools and actions that are beneficial to the organization as a whole.

Benefits of business Auditors in UAE

The idea of doing a business audit is incorrectly linked to the idea that something is wrong with the company. Today this does not reflect the truth.

Carrying out a business audit is a way to ensure that all processes are done correctly so that the company can achieve solid success!

Below are some of the benefits that corporate auditing brings to everyone involved in an organization:

Internal and bureaucratic processes carried out with transparency.
Early identification of errors so that they do not negatively impact the company.
Identification of failures in internal processes and their correction.
Identification of the company’s weaknesses, enabling ways to transform them into unique qualities.
Creation of more optimized and robust processes.
Assurance of good business practices.
Preparing the company for the future, especially if it intends to expand.

How to do a business audit?

To be carried out, the business audit needs to follow a few steps:

Identification of the sectors of the company that need to go through the audit process. In some cases, the company is audited;
If the company does not have an internal auditing department, it is time to look for a specialized company or an auditor who will act as a consultant.
List the points that need more attention in the audit process;
Facilitate the audit process by providing all the necessary documents for it to be done well.
After reading the auditor’s reports, clear all doubts and make improvements to correct the indicated points.

It is worth remembering that the improvements must be adopted and implemented throughout the company, after all, the benefits will be reaped by everyone and can be transformed into competitive differentials in the face of competition.

If you are looking for measures to make your company more competitive in its segment, performing an internal audit is essential.

Business audit how it works and how to do