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Grow Your Business Finances

Should You Audit Your Bookkeeper?

finances
Credit: wutzkohphoto/Shutterstock

As a small business owner, you have many responsibilities to juggle. It can be tempting to remove yourself from your business's finances just to take something off your plate – especially if bookkeeping and accounting aren't your strong suits. However, you should stay involved in your business's finances.

If you do hire someone to help with finances, should you audit your bookkeeper? The short answer is yes. Theoretically, if you keep yourself involved in your bookkeeper's processes, you should be fully aware of the state of your finances, but it's always a good idea conduct random audits to ensure all of your books are balanced and your bookkeeper is following proper protocol.

In addition to conducting random audits, some good rules to implement include reviewing copies of invoices before signing checks to ensure everything is legitimate and making random requests to see petty cash receipts or review bank reconciliations. Another good rule of thumb is to distribute financial duties and responsibilities so it's not one person handling all financial tasks. For example, you could require counter signatures on all checks. [Looking for the best accounting software for your small business? Check out our best picks.]

You may want to consider hiring another person to double check the books, also known as a controller. A good choice for a controller, if you're able to afford it, is to hire a CPA. Not only will they be able to check your bookkeeper's work, but a CPA is also a tax expert, which your bookkeeper most likely isn't. A CPA can thoroughly review your financial records to ensure everything matches up with your tax returns and find deductions you may have overlooked.

To ensure your bookkeeper and CPA collaborate smoothly, GrowthForce – a bookkeeper, accounting, and controller service provider – recommends that you create internal controls to establish clear expectations and maintain transparency between your bookkeeper, CPA, and yourself. For example, develop a procedure manual and Service Level Agreements (SLAs) to outline the processes and procedures for the financial statements your bookkeeper and CPA should produce and share as well as the timelines, formats, and methods for all deliverables.

Be sure to include processes for closing the books every month, too. AccountingDepartment.com recommends meeting with your bookkeeper at the end of the month to review the general ledger, match all transactions against credit card statements, bank statements, and bank and other receipts to ensure everything is accounted for and the books balance. Once they've been balanced, "close" the books so no additional changes can be made. [Find out the difference between an accountant and a bookkeeper.]

If your bookkeeper works remotely, AccountingDepartment.com also suggests that you include proper security protocols in the procedure manual. Making sure the passwords used are difficult to hack, locking their computer when they step away from their desk, and having your bookkeeper work on a secure server that doesn't allow files to be printed or downloaded are all security procedures you should invoke.

Even if you bring on a bookkeeper and a CPA, make sure you remain involved in their processes and if you have questions, don't hesitate to ask. It is still your business and you need to know how it's performing at all times.

Julianna Lopez

Julianna Lopez is a freelance writer, editor, and social media marketer. She loves all things New York, books, movies and theater. If you're interested in her services, you can reach her at lopez.julianna6@gmail.com