Generally, the objective of an audit is to review and provide information on key areas needing improvement. For financial audits, these are particularly on the following:
- Adequacy and effectiveness of controls to raise the level of assurance that losses are avoided or kept at a minimum
- Accuracy of financial and related reports submitted to top management
- Compliance with established policies, procedures, plans and objectives
The basic coverage for a quick audit of accountable personnel are the following:
- Managing receipts (includes collections and deposits, cash on hand and in banks)
- Cash count should be conducted regularly and proper disposition of funds should be within established policies and procedures.
- Collections should be supported by provisional or official receipts and deposited intact on the same day or next banking day as per policy.
- Bank reconciliation should be prepared monthly and unreleased checks should be accounted for.
- Daily cash balance should be monitored and daily cash position report should be prepared.
- Validated deposit slips should be compared with official receipts to ensure that all collections were deposited.
- Managing receivables
- Review aging of accounts receivables and analyze accounts over 120 days and beyond.
- Reconciliation with customers should be done regularly.
- Collections should be monitored.
- Financial documents such as passbook, investment certificates, checkbooks and other documents which are confidential in nature should be kept under lock and key.
So if you haven’t been doing these in your business, you better start or you will be in trouble sooner than later!
