October marks the start of Q4 and year-end duties and reviews for all business owners. Audits are essential to the year-end review process because they allow business owners and managers to fact-check data and analyze and improve their operations.
How to Conduct Financial Audits
An essential type of audit to conduct at the end of the year is a financial audit that reviews the company’s overall finances. Specifically, a financial audit examines the accounting processes and helps identify ways to streamline and improve them. There are five basic steps to conducting a financial audit.
Step 1: Gather Financial Documents
The first step in conducting a financial audit is gathering all of the company’s financial documents. Business owners and managers should review the systems put in place to send financial information to the accounting department. Review purchase order systems with PO forms and receipts. Are those processes working for accounting?
Step 2: Review the Accounting System
The second step in conducting a financial audit is to review the accounting systems to identify and review each element of the company’s accounting system. Are the accounting systems working, or is there missing information? You will want to look at debits and credits, journal entries, the general ledger, and current financial statements.
Step 3: Review the Financial Security Policies
After reviewing the accounting system, the next step is a review of the financial security policies to ensure the company’s finances are secure from theft and fraud. For example, should more than one person close the cash register at the end of the day? Is there room for internal theft? Consider tightening up current policies as needed.
Step 4: Compare Internal and External Records
The fourth step in conducting a financial audit is to compare your internal records against external records from the bank. Do they match? Are there any discrepancies?
Step 5: Review Tax Records
Finally, the fifth and final step in conducting financial audits is to review and analyze tax records and official tax returns. Remember, you should keep tax records for seven years, so you can go back and review tax records as far back as seven years. Does anything look off? Are there any unexplainable significant differences from one year to the next?
How to Conduct Marketing Audits
Another critical type of audit to conduct at the end of the year is a marketing audit that reviews the company’s marketing strategies and objectives. A marketing audit aims to check your processes and resources to determine which methods are working and which are wasting the company’s marketing budget. There are four basic steps in conducting a marketing audit.
Step 1: Describe Your Marketing Goals and Objectives
The first step in conducting a marketing audit is to decide your marketing goals! Your marketing goals should be well thought out and align with the company’s business objectives.
Step 2: Determine Your Audience
The second step in conducting a marketing audit is to decide who your audience is. Identify your audience’s demographics and behaviors to help determine the best way to market to them. For example, are they older or younger? Do they work, or are they too old or young to work? Are they interested in social media, or do they get lost on MySpace (because they haven’t realized that not many people use MySpace anymore)?
Step 3: Determine the Competition
The third step in conducting a marketing audit is to determine your competition and decide how you stand out from your competition. Identify your top five competitors and analyze their products, services, and marketing strategies. Compare your products, services, and marketing strategies to your competitors. What makes yours better? What makes theirs better? Review your competitors’ marketing strategies. How is your strategy different from theirs? Does it appear to work?
Step 4: Review Your Current Marketing Strategy
Reviewing your current marketing strategy is the fourth step in conducting marketing audits. Analyze your strategies. Determine what works well and what has not been successful. Identify areas of strength and weakness in your marketing strategy. As a result, you will have the data you need to increase the effectiveness of your marketing campaigns.
Use the Audit Results
Once you have conducted either type of audit, you will want to take your findings into the year-end company review, where you will analyze your results and plan for the upcoming year. Data collected from audits will help you identify the strengths and weaknesses of your current processes. Further analysis will reveal opportunities for growth and improvement. Consequently, you will be able to take what you have learned from this year and more effectively prepare for the future. Do not forget to conduct performance reviews of your staff and gather all your employee feedback to ensure you have as much data as possible when planning for the upcoming year.