An audit shouldn’t be a scary thing – but it’s kind of natural for a business owner to be apprehensive about opening your doors and letting someone look at your finances.
If you’re running a construction company, you’re probably familiar with the term, but what does it actually mean for you?
We’ve seen many construction companies struggle with audits. Some aren’t prepared for the process, leading to delays, extra expenses, and even legal trouble: all of which are best avoided if possible.
In this blog, we’ll help you prepare for an audit as a construction business owner.
Why are audits important?
An audit is a detailed examination of your company’s financial records and operations. If done right, it can help you identify areas of improvement in your financial management and reduce your risks.
For some businesses, an audit is mandatory – but other businesses below this threshold will choose to have one. This could be because a shareholder has asked for one or just for good measure.
An audit will provide a thorough analysis of your company’s financial performance, which can help you make better business decisions.
It’ll also help you identify fraud or other financial irregularities. Because construction projects often involve large sums of money, there can be a risk that someone may attempt to take advantage of the situation.
An audit can help you identify any suspicious activity and take corrective action before it’s too late. Without one, it can be difficult to identify these issues or areas for improvement in your financial management.
Getting prepared
Preparing for an audit can take up a lot of your time. When you’ve got multiple construction sites to manage and only so many hours in the day, your time is at a premium.
Thankfully, there are some clear steps you can take to make sure you’re ready for an audit, and have enough time to prepare:
Organise your financial records
Make sure your financial records are up-to-date and accurate. This includes your general ledger, accounts receivable and payable, payroll records, and bank statements.
Keep all of your records in one place, ideally through cloud accounting software (we exclusively use Xero).
Review your contracts and agreements
Are you adhering properly to CIS or IR35? It’s worth double-checking this before you’re audited.
Review all of your contracts and agreements to ensure that you comply with all applicable laws and regulations.
Make note of any potential issues or areas where you may need to improve your compliance. And always speak to a professional like us if you’re unsure.
Train your staff
Make sure your team are aware of the audit process and what is expected of them.
They should be relatively familiar with your financial records and able to provide accurate and detailed information to the auditor.
Speak to an expert
By hiring an accounting expert to help you prepare for the audit, you’ll get valuable insights into financial management and operations.
We’ve helped countless construction businesses with their audits – we know what it takes to make them go smoothly and can assist with preparation to avoid unwanted surprises.
We can provide you with support before, during and after the process, giving you up-to-date guidance and information to make it as smooth as possible.
Give us a call today to talk about your construction company audit.
