Four tips to boost your audit readiness

If your business was audited, would you be able to prove that your records are in compliance with all necessary state and federal regulations? It’s never too late to put practices in place or make revisions to your current practices to keep your business in compliance. Consider the following tips to boost your company’s audit readiness:

• Knowing what to keep can be a challenge for many businesses, but mismanaging records can mean you’re not complying with certain laws and regulations. Consider keeping the following on file: financial statements, past employee records, accident reports, internal audit reports, purchase orders, expired insurance policies, accounts payable and receivable statements, payroll records and summaries. You may also want to consider keeping copyrights, trademarks, patents, audit reports of public accounts, year-end financial statements and property records including, blueprints and tax returns, indefinitely.
• Think your files are secure? Have you considered the impact of a disaster like a fire, hurricane or the wrong person getting their hands on files? Be sure to securely store files and create backups of all files. Convert documents to electronic files and remember to back up your hard drive. To protect sensitive information from falling into the wrong hands, lock all files in a filing cabinet, safe or vault and password protect computers.
• Talk with your legal and accounting staff to determine the length of time to keep specific records. Never assume it’s better to be safe than sorry when it comes to holding onto documents. During an audit, federal law says they can go through all of your records on hand, regardless of the age.
• When documents have reached their full retention period, it’s critical to securely destroy the records. Shred files whenever possible, including hard copy files, electronic media, hard drives, microfilm and x-rays.

Photo by Simon Cunningham