Business entities deal with numerous transactions with different stakeholders since its inception. It is a well-known fact that sustaining a business in a competitive environment is a complex task that requires continuous brainstorming and planning. Keeping a check on the business activities turns out to be a mandate, and this core reason gave birth to the concept of an audit. However, conducting the audit process turns out to be a complicated task as it considered multiple aspects of the business before assigning an audit score. Many of the business entities turn to fail to earn a good rating due to various reasons. This guide will help you to understand the core reasons behind the failure of the audit process. Let’s have a look at them.
1.Non-Maintenance of the Bookkeeping Records
The business books of a corporate entity are considered to be its ultimate anatomy. These records hold the business numbers that project how your business has been performing since inception. Bookkeeping and accounting are the two core pillars that are inseparable from the ground of a corporate organization. If you fail to record the relevant transactions on time, there exists a high probability that the data gets lost. The moment audit process takes place, and the external auditor notices the fault, that leaves a negative impression about the company and the management.
2.Error in the Business Records
Even if you record the transactions daily, that doesn’t suffice the purpose of the deals recorded turns out to be faulty. Entering wrong numbers will ultimately lead to improper planning and strategizing decisions, which will hamper you at the time of implementation. During the recording process, it needs to make sure that exact details are entered and maintained.
3.Failure to Track the Business Debtors and Creditors
Another reason why the business entities fail to pass the audit process is that the organization fails to keep a track on their debtors and creditors. The high number of debtors might result to bad debt, which again is a loss for a company. On the other hand, if the number of creditors increases to a great extent, the business will suffer multiple losses after a specific duration. It turns out to be vital to maintain a balance between both because failure to do so will ultimately build more issues during the audit process.
4.Not Implementing the Suggested Steps
There might be occasions wherein the internal audit process gets conducted, which turns out as a good step in maintaining the overall health of the company. It is to be noted that the internal audit process is carried out to streamline the internal work proceedings. At the same time, it is also essential that you need to implement the suggestions offered by the internal auditor and also rectify the errors highlighted. Ignoring these essentials or postponing the same will lead to trouble and turns out to be a complex issue during the external audit process. As a result, you need to bear the consequences at the time of evaluation.
Being an employer if you fail to keep a track on the internal proceedings that are being performed in your company, then you might face an unexpected situation. There might arise a situation wherein you are providing your best in all possible means, but still, your records show completely different projections, the audit it’s an alarming call that you need to have a look at the internal aspects. You need to keep a check on the internal work proceedings to understand the reason. This turns out to be one of the relevant reasons as to why business investors fail in the audit process.
You need to understand that the audit process adds value to your business entity as it assigns an audit score. This enhances your reputation in not only the eyes of the auditor but also the government. The ideal way that most of the business owners prefer is to have a consultation with experienced professionals who can help you to deal with the process in a smoothly. It is essential to know that the early you implement the process, the better. JAXA Chartered Accountants can help you to deal with the audit procedures in a secure way. We stand as DAFZA Approved Auditors who have helped multiple clients across UAE to sort their audit process. Our business experts are well-versed with the required proceedings and can guide you at every step. Do contact us today to have a word with our experts-we’d be glad to assist.