10/02/2017 by Lavina Webb
Australia’s Corporations Act requires companies and other entities to comply with financial reporting and auditing requirements, depending on their size, annual turnover and other attributes. The Australian Securities and Investments Commission (ASIC) is the body responsible for regulating this compliance for those entities subject to the Corporations Act.
Why Do Business Need to be Audited?
Apart from ASIC requirements, there are other reasons for a company or business to request an external audit. The audit may be a contractual requirement, especially if they are accessing government funds, it may be part of a business quality system or management may have requested it to unearth suspected misuse of company funds.
These companies and businesses use external auditors to ensure the audit results are genuine and unbiased. Many of our clients fall under this umbrella and at Charter Partners, we provide high-quality audit services for these client businesses.
Audit Checklists a Useful Preparation Tool
Whatever the reason for the business audit, it follows a standard pattern and most businesses need to produce the same information. That is usually the role of its accounts staff, guided by the in-house accountant if the business has one, or as directed by our auditors. We provide a checklist of what we need so everything is ready for us to start work on arrival at their premises.
Bank Information, Tax Invoices and BAS Standard Requirements
Bank statements and reconciliations have always been important, but now that most transactions take place via direct debit and internet transfers, these are essential to check that all funds are accounted for. We need to view tax invoices and BAS (business activity statement) returns to ensure that all GST collected has been remitted to the taxation authorities, and to verify the accuracy of the BAS.
Ageing Reports, Account Reconciliations and Depreciation Schedules up Next
Aged debtors and aged creditors reports for the financial year under review are needed to check that debtors are being followed up to avoid bad debts, and that the business has their debts to others under control. Reconciliations of crucial ledger accounts are also required for the audit as are depreciation schedules.
Fixed Assets and Insurances Under the Microscope
We also review the fixed asset register and the supporting documentation for any major transactions that have taken place since our last audit. Insurance documents and especially certificates of currency from the insurers must be checked to ensure to all business operations have sufficient insurance cover.
Payroll a Critical Area
Regardless of whether the workforce is large or small, the audit covers the payroll area. Payroll summaries, information on employee entitlements, superannuation statements and payments to superannuation funds all must be reviewed and any anomalies highlighted.
This summary is not exhaustive but covers the most common areas reviewed in a basic audit. A business with a good accounting system that is accurate and upto-date need not see an audit as an onerous process.