Why Should A Company Have A Financial Management Audit?
A company should have a financial management audit primarily to ensure that there is a system in place that will control cash flow and tracking of funds through the company’s accounts, as this will allow for accountability and improved forecasting.
Does This Include An Audit Of The Company’s Finances?
A financial management audit is not an audit of a company’s finances, but an audit of its financial procedures.
What Areas Are Covered In A Financial Management Audit?
A financial management audit covers the tracking of cash, checks, and charges that are received, as well as the recording of all transactions; all of this information is then reported to management.
What Are The Advantages Of A Centralized Financial Management System?
A centralized financial management system allows for data to be shared with others in the company who need access to that data. This creates accountability for the people who are handling the finances of the company, encourages consistency in the handling of transactions, and improves company-wide efficiency.
What Features Should Be Included In A Centralized Financial Management System?
All transactions must be recorded in a manner that will capture all of the relevant information that will eventually be needed. All transactions must be cross-referenced with the source of the income or the expense within the recording. Periodic reports of all the activities will need to be generated and then summarized for management.
How Does A Centralized Financial Management System Help Avoid Embezzlement and Other Losses?
By associating each item of income (e.g. checks, cash, charges) with the source of the income and tracking that income until it’s been deposited, centralized financial management systems reduce the opportunity for embezzlement of cash receipts or checks. In addition, these systems associate all payments made with a specific account payable item, which reduces the possibilities of fraudulent payments.
How Does A Financial Management System Help With Budgeting?
A financial management system constantly tracks cash flow, which allows for more accurate budgeting predictions to be made by management.
How Does A Financial Management System Help With Reporting?
A financial management system ensures that all transactions entered in the system are categorized and linked to other related transactions, which allows for summary reports to be generated within each category, and for management to strengthen their decision-making and forecasting ability.
Is There A Benefit To Both Internal And External Audits?
Internal audits check the system for any errors or shortcomings, while external audits check the results of the system for efficiency and compliance. In other words, an internal audit ensures that things are being done in a way that allows for efficient reporting and accountability, and an external audit ensures that the systems have been followed correctly.
Who Is Involved In A Financial Management Audit?
A company’s chief financial officer (CFO), treasurer, or controller would be involved in a financial management audit. From outside the company, a CPA, an attorney, and possibly the company’s banker would be involved in the financial management audit.
How Long Will The Financial Management Audit Take?
In general, a financial management audit takes 30 to 60 days, not including the process of implementation, which usually occurs over the course of three to six months.
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