{"id":39378,"date":"2018-12-23T18:34:48","date_gmt":"2018-12-23T18:34:48","guid":{"rendered":"http:\/\/localhost:8888\/cregital\/disha\/2018\/12\/23\/auditing-basics-for-msmes\/"},"modified":"2018-12-23T18:34:48","modified_gmt":"2018-12-23T18:34:48","slug":"auditing-basics-for-msmes","status":"publish","type":"post","link":"https:\/\/msmehub.org\/staging\/6671\/auditing-basics-for-msmes\/","title":{"rendered":"Auditing Basics for MSMEs"},"content":{"rendered":"

Gone are the days when business owners are uninformed about building sustainable businesses. Business owners today are actively searching out relevant information on the seemingly technical aspects of their businesses and one of those ‘aspects’ is auditing. <\/p>\n

In the past 12 months, Google trends show Nigerians search for audit information has been increasing rapidly (https:\/\/g.co\/trends\/UkYgL<\/a>). This is a clear indication that people are beginning to realize the importance of auditing in business irrespective of business size.<\/p>\n

Difference between Auditing and Accounting<\/strong>
Often times, auditing and accounting are thought to be the same and sometimes creates confusion. Auditing is the process of determining whether recorded information properly reflects the economic events (transactions) that occurred during an accounting period usually 12 calendar months. Accounting on the other hand is the recording, classifying and summarizing of economic events for the purpose of providing financial information in decision making – Fifteen Edition by Alvin .A. Avens and two others<\/em>.<\/p>\n

Types of Auditing<\/strong>
There are two major types of auditing namely: 
1. External auditing.
2. Internal auditing.<\/p>\n

External Auditing <\/strong>
External auditing is conducted only by a professional accountant called an auditor. It is statutory – meaning the law requires every company to do it in each accounting period. The auditor writes a report at the end of the audit based on the audited\/checked records.<\/p>\n

Internal Auditing<\/strong>
Internal auditing can be conducted by anybody as long as the person understands what to do. You can conduct it in your business too.<\/p>\n

Things Needed to Conduct Internal Audit <\/strong><\/p>\n

1. General ledger<\/p>\n

2. Copies of loans, lease and contract materials may include but not limited to long term agreement with suppliers,  employment contracts, buy – sell agreement etc<\/p>\n

3. List of all new assets purchased with receipts<\/p>\n

4. Loan statements<\/p>\n

5. Payroll reports, if any. Not all new businesses have employees but if you do, you need to get payroll reports for testing of wages and salaries expenses<\/p>\n

6. Bank statement. Banks have simplified the process because they now provide online e-statements. <\/p>\n

Simple Ways to Conduct Internal Auditing<\/strong><\/p>\n