If you operate your own company, you probably never want to hear the word “audit.” It almost always has negative connotations.
The audit you might think of first when you hear this term involves the IRS knocking at your door with some tough questions for you.
An IRS audit is far from the only kind that exists, though. You can also conduct an internal audit if you’re running into problems or you believe your business is not performing quite as well as it should.
Today, though, we’re going to talk about a third audit variety, the dynamic audit solution. Some companies abbreviate it as DAS. This is where you use software or bring in an outside agency to audit your company to streamline your operations.
Let’s talk about some reasons why you should consider employing a DAS today.
1. A Dynamic Audit Can Identify Waste Areas
One reason why you’ll either want to bring in an outside agency to look at your finances or utilize some tax and accounting software is that you can identify any areas you’re spending money where you don’t necessarily need to. You might have spots where you can cut corners.
If you’re running a larger, more complex company, this is where you’ll get the most use from this approach.
A tiny company that’s operating on a shoestring budget is going to know where every dollar is going. That might not be the case if you have a multimillion-dollar business.
If you can use an audit to figure out any areas where you can eliminate or reduce expenses, you might do some company restructuring. With the money you save, you can hire additional workers or expand into new markets.
2. You Can Make Sure No Theft is Happening
Audits can sometimes identify waste areas, but you can also occasionally use them to identify theft as well. You’d like to hope that everyone in your company is honest, but maybe you’re seeing money disappear from certain departments, and the numbers are not adding up.
An audit helps you more easily identify what department is hemorrhaging money and who might be responsible. It’s no fun having to seek out and pinpoint any misappropriation or outright theft of which someone is guilty, but you need to do so for the company’s sake.
If you find indisputable evidence that someone has been stealing, you can fire them or involve the authorities if necessary.
3. You Can Eliminate Any Redundancies
Audits often reveal redundancies in business as well. Again, this can be a problem when you have a larger company with many different moving parts.
A small company will know if they’re paying for two services or they have two vendors that provide approximately the same thing.
If you have a larger company, though, especially one that has found sudden success and grown exponentially, it’s harder to stop these redundancies from occurring.
You can talk to your department heads about whether they need multiple services that accomplish the same thing. As you go through the audit, you can take away from it an itemized list of questionable expenditures that you may want to eliminate.
4. You May Find Money You Can Allocate Toward Other Areas
On a related note, you can take any money that you save by cutting costs in certain areas and apply them elsewhere. You can often use an audit as a way to discover untapped financial resources. You can then juggle them accordingly.
You might use the money you find and hand it to the R and D department if you want to come out with some new products soon. You may look into foreign market expansion, or you could get newer equipment.
You could expand production and start looking for new suppliers. You can start hunting for more stores or online retailers to carry whatever it is you produce.
Conclusion
If you’re in the tax and accounting business yourself, you can also utilize the newer dynamic audit solutions that now exist. You might have a situation where a company doesn’t have the skill to use the DAS software that’s currently on the market.
You can handle all of the tasks we mentioned yourself. Many companies will pay accounting firms top dollar to conduct their internal audit.
This is a better solution than waiting for the IRS to notice when something is wrong. If the company holds off and takes that approach, they could face severe penalties if they have been running their business inefficiently.