27 May An external audit – how to prepare & benefit from one!
External audits don’t need to be something you think of with trepidation! In fact, we’d like to suggest the opposite! So long as you have prepared, an external audit can bring great value to you and your business by ensuring your processes are efficient and that opportunities for improvement are not missed. Here we explore why you should have your company audited, how you can benefit from one, and most importantly, how to prepare for that date in your calendar!
What is an external audit?
An external audit is a check on your organisation’s financial and business processes and records. It should be carried out by an independent professional who is qualified to audit against a specific standard or set of standards. The auditor acts as an independent expert who, typically, during a visit to the premises of your business can provide a fresh perspective on your business processes. Audits usually take half a day to a day, and often are carried out annually, although this does depend on the scope of the business and number of sites needed to be taken into consideration. The auditor will be comparing what your business says it does to what you actually do on a daily basis. Do your records match your actions?!
Why have an external audit?
The reasons for and function of an external audit can vary considerably. You may need a one-off general audit to review how effectively your organisation is operating after a period of restructuring, for example, to help instil a sense of confidence in management. Or it may be an annual, large-scale audit that you require, to provide investors and shareholders with reassurance and evidence proving how well your organisation is run.
An audit can play a vital role in the pre-certification process helping you gain accreditation to a set industry standard. Audits act as a review of your compliance with a multitude of administrative and legal regulations, checking that what you currently hold is relevant and adequate for your business and its prospects. An audit can even be a requirement of one of your clients or necessary if you are part of a supply chain. You’ll be hoping your audit will be successful, and once this is the case, you may plan to publicise this fact to help maintain and enhance your company’s reputation within the community and your business sector.
What to expect?
Auditors, contrary to popular belief, are very useful to your business. An auditor is not there just to observe, they are there to help, and as such their insight and expertise should be valued and their findings used as opportunities to improve. But what will happen on the day?
The auditor should send you a plan in advance of the meeting, setting out what they intend to spend their time on, and with whom they will need to speak. Your audit may be carried out over half a day, a whole day, or more, depending on the scope of the audit and size of your business. You will be given an indication of the type of systems and documents needed to be made available to the auditor.
On the day of the audit, the auditor should walk you through their process, explaining what they need to see and why. They will expect to have open access to the items they request, although these should be reasonable and relevant to your business processes. They may ask to speak to different members of your organisation and even to test and observe processes being performed. They will be referencing any differences between documented and experienced processes.
At the end of their visit, they will document all their findings and provide an audit report. This report should provide feedback on areas you passed and didn’t pass, and any actions required with expected timescales.
How can you benefit?
We’ve already alluded to some of the benefits of having an audit when discussing the numerous reasons behind holding one. Even if you’re not obliged to have an audit, there are still many ways you can benefit.
Regular audits can help ensure your business is functioning at its highest level and achieving the best possible outcome. Thorough examination of business processes and procedures, monitoring of a company’s compliance documentation and management, and assessing the standards to which a company adheres to, all help gain a comprehensive and objective overview of exactly what is going on in your business. An auditor will accurately uncover the truth behind the efficiency of your business and suggest actions required to remedy any problems. Small issues with the running of internal management systems, for example, can later lead to bigger problems if left unaddressed, so acting on the recommendations in an auditor’s report is for your benefit in the long run.
“A good audit will illuminate the effectiveness of your business processes, identify areas for improvement, discover potential opportunities, and outline the certifications and accreditations which need to be updated.”
Katy Berrill, Lead Auditor for Management Systems, KCS Compliance Services
An auditor can also identify opportunities and areas for a business to build on to help future development and growth. An unbiased, objective professional, i.e., the auditor, may notice a new business prospect that has been right under your nose! Or maybe your business has room for improvement? Whatever the outcome, the aim of an audit is to make you more efficient and help you produce work of a higher quality so that your customers are even happier.
Audits also act as a good check on your company’s compliance and then can be used to demonstrate your compliance when renewing an accreditation or applying to win a new contract or bid for a tender. If you’ve already successfully passed your audit, you’ll be better able to assess whether you can be confident in applying for that new certification or contract.
Audits are ultimately an investment in your company and its personnel – a commitment to ongoing change, constant improvements, and the very best practices. An accurate and effective audit can be vital to the efficiency, growth and overall success of your business.
How best to prepare?
To ensure a smooth and successful visit from an auditor, there’s lots you can do in advance. And by ‘in advance’, we don’t mean the night before!
The first thing you should do is ensure your documents and working environment are in line with your procedures. It’s no good if your records or systems show you doing something one way, when in reality you do it a totally different way. Part of the job of an auditor is to test and observe processes being performed, so they need to match.
It’s also vital that you inform and brief relevant members of your team on the upcoming audit, so they know what to expect and are aware that the auditor may need to speak with them. As well as informing your team, it’s crucial to collate as much information together before the audit, so you have all relevant paperwork to the audit plan in one place. This helps make the audit as smooth as possible and will show the auditor that you run a tight ship!
If you have a known issue, or you use a very specific business language or system in your business, it’s best to let the auditor know in advance of the meeting.
Of course, if you are struggling to prepare or you really are not sure what to expect, you can always seek support.
At KCS Compliance Services we offer a number ways in which we can help you achieve a successful audit.
As specialists in providing compliance support across business sectors, we provide internal management system auditing to check your company processes and suggest improvements to help you prepare before your external audit. We can also help you implement and renew industry specific accreditation and certification, such as CHAS, ISO 9001, Constructionline and Smas, to ensure your compliance is up-to-date and relevant for your business. Running training courses in ISO 9001 and internal auditing is also one of our specialist and bespoke services, helping customers in time be more able to review their own systems and processes.
Contact us at KCS to request a free 1 hour consultation to help us get a clear picture of your needs and show you how our services could help.