Businesses lose around 20%-30% in revenue due to inefficiencies every year. Convoluted and inefficient systems are all too often relied upon by businesses, which wastes valuable time and money.
Internal Business Audits: How To Improve Efficiency and Save Money
Fortunately, internal audits allow you to evaluate your operational processes to identify and eliminate inefficiencies and, ultimately, facilitate business growth.
Benefits of Internal Audits
Internal audits are assessments conducted in-house to determine how
smoothly operational processes are working. They essentially pinpoint the root causes of operational disruptions and identify opportunities for improvement and ways of saving money, time, and effort.
Additionally, regularly performing internal audits impresses and builds trust with employees and customers as it shows your business prioritizes matters of customer service, quality, health, and safety.
Internal audits can also enhance your business’ security. It enables you to scrutinize your digital environment and examine whether the devices used in your workplace are secured in line with your office policies.
It can also identify risks to your business and analyze whether your efforts to mitigate these risks are effective.
If they aren’t, the reports from the internal audit will advise you on the best way to deal with these risks.
An audit can also help to create a disaster recovery plan for your business, in case of theft, a natural disaster, or other unforeseen events that could be potentially catastrophic for your company.
Can Small Businesses Benefit From an Internal Business Audit?
Most people think that internal audits can only benefit mega-corporations. However, even small businesses need internal audits to identify common problem areas.
Some of these include monitoring key processes, since senior management often spends more time and effort running the business, and not enough time is spent monitoring operational processes to prevent errors or fraud.
Moreover, small businesses often have weaker data security, which makes them vulnerable to cyber crimes which can result in huge losses.
Internal auditors can pinpoint cybersecurity weaknesses and come up with a plan to strengthen your current system. An internal audit can also benefit your business if you have a high employee turnover rate.
By developing proper documentation to clearly define job functions and duties, internal auditors can help to minimize the loss of knowledge during the turnover process.
How Do You Know if You Need To Have an Internal Audit Performed?
Some businesses only schedule an internal audit once they find major discrepancies in their books, or if they need to corroborate evidence of fraud.
However, to minimize losses, small businesses can ask for an internal audit once they start noticing a large number of unexplained expenses every month.
If you can’t figure out where the money goes, you’ll need the help of an internal auditor to track down where your business spends money.
The audit reports will also let you know if these expenses have been approved by authorized personnel, and if they’re being reported accurately and in a timely manner.
You may also have an internal audit performed to check if a critical system or area is being used in the right way.
For instance, let’s say your business training manual can be accessed online. Is this manual locked down and password protected?
Or perhaps your company’s reports are on a spreadsheet– do the right people have access to it, and is it protected to prevent alterations?
If customer satisfaction is important to you, then that’s another reason why you should have someone do an internal audit on your company.
By going over the auditing report, you’ll know if your customers are satisfied with your services or products, as well as what you can do to improve customer satisfaction.
You’ll also learn whether your customers would recommend your products and services to others, and how they think your company performs compared to your competitors.
Set a Clear Goal and Plan
No internal audit can be successful without a clear goal. In fact, the more well-clarified your goal, the more effective your internal audit.
So, start by asking yourself why exactly you want to perform an internal audit. Do you primarily want to enhance processes, reduce spending, or minimize risk?
Once you have a clear goal, you’ll be better able to devise a solid audit action plan. For example, you’ll likely want to examine how well your current processes run from beginning to end.
Where are the main problem areas, blockages, or risks? What instructions do staff receive to ensure processes run smoothly?
How do you monitor the success of your processes?
Devise and Implement Solutions
After identifying operational weaknesses, you can then devise and implement effective solutions. For example, if you often fall behind on tasks, outsourcing jobs to a third party is a good solution.
Whether it’s for marketing, admin, IT, or legal, outsourcing is valuable across all industries, but particularly for attorneys. For example, prospective clients typically like meeting during standard office hours.
But, if your office hours are largely spent drafting documents instead of adequately preparing for these meetings, you’re unable to grow your business to its maximum potential.
Outsourcing daily tasks will free up your time to better serve prospective and existing clients.
Whatever solutions you implement, always inform your employees of new practices and systems and provide clear evidence-based reasons for their implementation.
This will help ensure successful adoption with maximum return.
What Qualities Should You Look For in an Internal Auditor?
Small businesses usually don’t have a separate department to handle internal audits, so you can self-audit if you like. However, outsourcing is your best bet to get good results.
Keep in mind that auditing isn’t just about checking processes– it’s also about consulting, so you’ll need to find an internal auditor who can come up with a good strategy, has a balanced view, and knows how to look at the bigger picture.
They should also understand the challenges that business owners and staff face daily, so having a certain level of empathy is important.
Familiarity with your line of business is also essential to make it easier for them to come up with recommendations that will enable your company to run smoothly and effectively.
However, an internal auditor should also be impartial, and they shouldn’t be swayed by people who could try to influence them for their own benefit.
They must also have a keen eye for the tiniest details without being overly critical. Finally, an internal auditor should have impeccable report-writing skills.
Conclusion
The report should be easy to understand, include a summary of key points, and have clear and doable recommendations to help your business thrive.
Internal audits are a must for increasing the efficiency of your business. With internal audits, you can optimize processes and systems and ensure greater business success.
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