“Audit” is a dirty word; for most, it conjures up the image of agents of a faceless bureaucracy rifling through the most intimate details of their lives. For business owners, however, audits are an important tool in identifying improvement opportunities. Determining when to conduct an internal audit isn’t exactly a straightforward process; different aspects of your organization require different levels of oversight depending on their overall importance, but that is far from the only factor to consider.
Why you should conduct internal audits
From The Thriving Small Business: “Businesses use policies and procedures to maximize efficiency and create consistent practices. However, policies and procedures are only as effective as an organization’s ability to enforce them. An internal auditing process helps ensure policies and procedures are followed and noncompliance is reported to management for corrective action.” This may sound like self-reinforcing jargon, but most business policies are in place to ensure legal compliance as well as consistency of process and quality of services. Every process should be audited.
Compliance audits don’t have to be painful. As a matter of fact, spending a little time addressing the auditing process can make life easier for everyone and increase the efficiency and profitability of your business overall. These three steps can make internal audits easier on everyone:
- Identify and define the policies and procedures that you have and those that you need. If there isn’t a clear policy to govern a situation, write one. When your employees know exactly what is expected of them, it’s more likely that they will be engaged in your business. Happy employees don’t just boost morale; they boost efficiency.
- Determine how often audits should occur. Quality control audits in manufacturing may occur hourly or daily; auditing I-9 compliance by Human Resources on the same schedule would be ludicrous. Creating an audit calendar puts everyone on the same page and allows proper preparation to prevent poor performance. When both the department and the auditor are prepared, there is less downtime for your company.
- Make reporting clear and easy. Reporting audit findings shouldn’t require endless spreadsheets or difficult-to-read notes. A proper report framework can help reduce the amount of time spent auditing the audits, making the entire process more efficient from top to bottom.
For more detailed descriptions and suggestions about self-auditing, check out our earlier blog on the subject here.
Internal audits can be easy- we can help
If your internal audits take a considered approach to your processes, are properly scheduled and easily reported, then the internal audit process can great increase your efficiency and, at the end of the day, your profitability. However, it can be next to impossible to take time out from running your business to sit back and properly evaluate your business; sometimes, you’re just too close.
Alex Gertsburg is a managing partner at Gertsburg Licata. He may be reached at (216) 573-6000 or at [email protected].
Gertsburg Licata is a full-service, strategic growth advisory firm focusing on business transactions and litigation, M&A and executive talent solutions for start-up and middle-market enterprises. It is also the home of CoverMySix®, a unique, anti-litigation audit developed specifically for growing and middle-market companies.
This article is for informational purposes only. It is merely intended to provide a very general overview of a certain area of the law. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney licensed to practice in your jurisdiction. If you have specific questions about your matter, please contact an attorney licensed to practice in your jurisdiction.
