How an effective audit can improve your law firm

Your annual audit may feel like just a box-ticking exercise for compliance – but with us, your audit can make a real difference to your law firm.

Used correctly, an audit is an invaluable tool for understanding the financial health of your firm and identifying areas for improvement.

Regardless of whether it was undertaken for statutory compliance or not, the primary goal of an audit is to ensure that your financial statements give a true and fair view of your company’s position.

However, a good auditor will go beyond just compliance, giving you insights into your operational risks, weaknesses in internal controls, and areas where you can enhance efficiency.

As such, you should treat the audit as a learning opportunity – not just a statutory requirement.

Review key areas highlighted in the auditor’s report

Once you’ve received your audit report, you should carefully review the key findings.

You should focus on:

Internal control deficiencies: These highlight areas where your processes may be inefficient or prone to error. If your auditor has flagged control issues, consider implementing stronger internal checks and balances.
Risk management advice: Auditors often assess your risk profile and suggest ways to mitigate potential threats. Pay close attention to these recommendations, as they can help you avoid costly surprises down the line.
Going concern status: If your auditor has raised any concerns about your firm’s ability to continue as a going concern, you need to act swiftly to address liquidity or solvency issues.
Inefficiencies affecting your cash flow:Your auditor can identify common areas where you might be experiencing issues with your cash flow, such as long invoice and receivables collection periods, too much stock, or difficulties managing debt.

It is important to prioritise the areas of concerns raised, ensuring you tackle more pressing problems first.

Implement changes to internal processes

Many audit findings will point to inefficiencies in your internal processes.

Thankfully, there are a range of solutions available:

Update your accounting software: If the audit revealed manual errors or inefficiencies, it might be time to upgrade to a cloud-based system that automates certain tasks, reducing the risk of mistakes and saving time.
Segregate duties: If your auditor flagged a lack of segregation of duties in financial processes, this is a red flag for potential fraud. Implementing clear role divisions within your finance team can minimise risk.
Improve documentation: Auditors often highlight weak documentation as a recurring issue. Ensure your team keeps thorough and clear records, particularly when it comes to expenses and financial authorisations.

Your accountant can help you deal with these operational issues and implement the strategies to amend the situation.

Create an action plan for implementing changes

It’s easy to feel overwhelmed by a lengthy audit report, especially when it suggests numerous changes.

The best way to tackle this is to create an action plan:

Prioritise high-risk areas: Focus on areas where non-compliance or operational inefficiencies could have the greatest impact on your business.
Assign responsibilities: Make sure each action point has a responsible team member and a deadline.
Set a timeline: Implement changes in stages to avoid overwhelming your team. Track progress to ensure improvements are made consistently.

Once you’ve started implementing the changes recommended by your auditor, schedule regular reviews to assess progress and make sure you stay on track.

At Moore Thompson, we are experienced in carrying out specialist audits for solicitors under the Solicitor’s Accounts Rules.

Our audits will give you fresh insight into your business, as well as health-checking your financial controls and wider business. The audit doesn’t end with our report – we’ll discuss our findings and any recommendations with you.

Together, we’ll help you maximise your savings, minimise your liabilities, and boost efficiency.

Contact our expert team today to get the most out of your audit.