Generally, all businesses undergo financial audits, and the franchise business isn’t an exception. An audit helps determine a franchise business’s financial health and identify bookkeeping malpractices. In addition, audited financial statements also serve as disclosure documents in item 21 of the Franchise disclosure document.
When is a Financial Statement Audit successful?
A franchise financial statement audit is successful when you receive an unqualified or clean opinion which is a stamp of approval indicating that the franchise financial records aren’t materially misstated. However, the complexity of the franchise business might make it challenging to get a clean bill of health without thorough preparation. Follow these four steps to prepare for your next Franchise Financial Audit.
Plan for the Franchise Financial Audit
Franchise financial audits are spontaneous, and planning helps you stay ahead of the last-minute rush. It includes activities like keeping detailed records of each sale, purchase, or payment service as the foundations for a solid plan which will eliminate the pre-audit pressure.
Keep up with accounting standards
Accounting standards define the rules set by regulatory bodies to systemize an organization’s bookkeeping and other accounting activities. These rules change often, and it can be challenging to familiarize yourself with them in a short period. Ensure that your accounting practices are updated regularly to conform with existing standards to avoid compliance issues and sanctions.
Assess Organizational Changes and Previous audits
Consider all changes the franchise business has had since the last audit that can influence the audit report. Also, it’s important to review past audits and identify complaints or comments. Check carefully to ensure that the complaints have been handled and fixed.
Organize Financial statement data
Prepare all financial and working documents for the year in reviews such as financial statements, general ledger, fiscal year budgets, invoices, and transaction records. Ensure they are all up to date and ready to be submitted for a financial audit.
Get a professional external Auditor with Metwallycpa
Depending on your franchise agreement, you might require the services of an independent auditor – mostly a CPA firm – to audit your financial statement. Contact us for professional financial statement audits that meet all account standard requirements.
