Like so much else in today’s world, the annual financial audit is evolving to keep pace with technology and the real-time economy.
Computer advances, automated tools, sophisticated systems and software, new kinds of data extraction and analysis, and even apps are helping auditors transition to improved approaches and techniques.
Today’s audit should do more for you than simply assess the health of your farm, ranch or other ag business. It should extend beyond how you handled accounting practices, internal controls and other financial details over the past year.
Instead of simply looking back at what occurred over the past 12 months, the modern audit can look at real-time data and provide solutions. With the knowledge mined during an audit, financial advisors should be able to identify risks that may be assessed and managed for the long-term health of your business. In the hands of progressive audit advisors, a modern audit can provide you with value-added suggestions to improve both your finances and your operation.
Many businesses have lost opportunities by relying on the same old standards and outdated practices of a traditional audit.
“All audits are not created equal,” says my colleague Justin Mentele, a partner at KCoe Isom. “We have witnessed a wide discrepancy in the level of analysis and evaluation performed by audit advisors, and the opportunities many businesses have lost by being underserved are evident.”
As a crop producer, livestock manager or ag processor, you can benefit greatly by the modern audit process. Consider these three ways to improve your business’s audit requirements:
• Use a year-round approach to auditing. Many ag businesses wait until late in the year to start the auditing process. They face the grueling process of scrambling to find documents and then having the audit team camp in their office or conference room for a day or more, going over accounts receivable, tax forms, employment records and all else. But by working on auditing your operation throughout the year and not waiting until the last minute, you’ll benefit in several ways. You’ll remove the stress and distraction of the audit process. You can capitalize on proactive ideas during the year, in real time—not in hindsight —to take advantage of efficiencies and opportunities that a modern audit can reveal.
• Capture a virtual inventory. Throughout the year, use video technology to observe and record the physical inventory of your business. Your employees can perform this at their convenience. This can be very effective in simplifying and aiding the audit process.
• Embrace artificial intelligence. Using technology like artificial intelligence has been a game changer for the audit process. New systems, standards and accounting procedures are enabling audit advisors to study large volumes of data. Among the most commonly used modern audit tools is the Computer Assisted Audit Technique. With advancements like CAAT, modern audits provide the peace of mind that comes with a thorough and deep dive into your financials while creating more time to focus on assessing and improving processes, procedures and policies. That drives greater value and results for your business.
As with standard audits, a modern audit will provide you with a detailed examination of your business’s books, accounts, records, documents and financial statements. This scrutiny insures your accounts are properly maintained, any discrepancies are resolved, and compliance issues are properly addressed. Yet, even with technology, the intrinsic value of the audit process depends on the wisdom and approach of the audit team.
By taking advantage of the modern audit process, you can benefit from its quality, speed and newfound insights. Moreover, you can incorporate its recommendations and improvements to create opportunities and add value for your business while ensuring the integrity of your financial system.
Editor’s note: Maxson Irsik, a certified public accountant, advises owners of professionally managed agribusinesses and family-owned ranches on ways to achieve their goals. Whether an owner’s goal is to expand and grow the business, discover and leverage core competencies, or protect the current owners’ legacy through careful structuring and estate planning, Max applies his experience working on and running his own family’s farm to find innovative ways to make it a reality. Contact him at email@example.com.