Owning and operating your own business can be challenging especially when it comes to keeping your accounting practices in order. One of the areas of accounting that can be difficult to navigate for those of us who are inexperienced or who do not have a formal education are audits. For example, a transaction audit and internal audit are often used collectively in the same sentence and many people are unaware that the practices are very different entities.
Definition of a Transaction Audit
A transaction audit is best described as a report that can be used to accurately report your business transactions. This particular tool can be used to provide information on the financial health of your business. A transaction audit is often used as a tool during the internal audit process to provide some very important information. Transaction audits are typically broken down into two separate accounting columns to make them easier to understand and record. The first section is comprised of the name of the transaction from information provided by the general ledger. The second section is the journal entry that was recorded on the general ledger.
Transaction Audit Function & Purpose
When your bookkeeper records a business transaction, an individual transaction audit will provide an audit number to keep track of the transaction as it is recorded with other transactions made during your daily business. Transaction batches are used to keep the transaction audit organized. For example, if you enter 10 transactions at the same time, they will be assigned to the same transaction batch. Not only does this make the transaction audit process simple and easy, it also keeps your transaction history as organized and easy to review as possible.
Internal Audit Definition
While a transaction audit is designed to analyze the health of your transaction history, an internal audit on the other hand is designed to evaluate the effectiveness and health of your business in general including the day to day business operations and the effectiveness of your marketing tools among other things. An internal audit can help you analyze the health of your business by providing invaluable information on areas that can be improved. Internal audits can help you increase your profit margin by identifying unnecessary expenditures, potential fraud, and help you improve the overall operations of your business. When an internal audit is performed it is important that the audit be as detailed as possible regarding the findings of the audit. The information contained in the audit can then be used to analyze your business from top to bottom which in turn can be used to improve the overall operations of your business.
Accounting, Auditing, Taxes & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
To learn more about the auditing process and how it can benefit your Las Vegas, Nevada business, contact the knowledgeable experts at Mark Dicus & Company today, for all of your accounting needs including business consulting and tax services.