Preparing Your Business for a Financial Audit or Review: Part 2

MoneyTips

Many small companies have bookkeepers on staff rather than accountants. Bookkeepers are generally great at processing daily transactions. However, an accountant is more versed in analyzing what is left in the financial statements at the end of the day. Let’s take a look at some common items on your balance sheet (a.k.a. statement of financial position) and procedures that you can do to ensure you can pass the scrutiny of the independent auditor/reviewer. My assumption here is that you are on the accrual basis of accounting.

Cash – All bank accounts should be reconciled as of the balance sheet date. Start with the bank statement balance, add any deposits in transit, deduct outstanding checks and arrive at your book balance. Look at your outstanding checklist and other reconciling items and make sure that any old items (over 90 days) have been researched. Stale-dated items can raise questions in an audit or review. As most items clear quickly, older i…

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