How to use audit findings to improve business processes in your law firm

Does the ‘A-word’ fill you with dread? Between managing sensitive client data and payment information, and ensuring appropriate management of your payroll and other finances, an audit can be a difficult time for law firms.

However, this perception overlooks the constructive aspects of auditing, which can offer you a lifeline towards enhanced operational efficiency.

Far from being just a compliance requirement or a necessary inconvenience, an audit serves as a valuable tool for improving your operational efficiency and financial stability.

Within your firm, you should see audits as a vital way of improving your financial health and boosting your profitability and compliance.

Identifying weaknesses in record-keeping

During an audit, your business comes under scrutiny in a number of key areas.

One area that often emerges as problematic is inconsistent record-keeping.

This isn’t merely a red flag for auditors – it can be an invaluable opportunity to refine your documentation process.

Digitising financial records not only aids in accuracy but also makes retrieval and review more efficient.

It could even prompt a review of how you collect and store financial information, such as through a cloud solution or a bespoke tool.

Addressing unauthorised transactions

Another area auditors frequently focus on is your firm’s transaction history, where they may find unauthorised transactions.

Such findings expose gaps in governance and oversight within the company.

Rather than viewing this negatively, use it as a catalyst for improving your internal controls and tightening your approval processes.

Strengthening internal controls

Audits can also reveal inadequacies in your internal control measures designed to prevent fraud and errors.

If your audit indicates weak internal controls, take this as a call to action.

A more robust system of checks and balances can fortify your financial management system, making it more difficult for financial mismanagement to occur.

This is particularly important to protecting your clients and their finances.

Optimising cash flow

A healthy cash flow is important to being able to meet unexpected financial challenges and cover costs. Audits can often uncover bottlenecks affecting liquidity which may impact your ability to make payments or invest where necessary.

These findings should lead to a re-evaluation of your collection and payment strategies.

By doing so, you can enhance the efficiency of your cash flows, thereby strengthening your financial standing.

How to see audits

Rather than approaching audits as a burden, it’s beneficial to view them as a diagnostic tool for your business.

They offer crucial insights into the strengths and weaknesses of your financial processes and present a roadmap for constructive change.

Audits are a way of peeling back the curtain on the financial health of your firm and giving you a clear view of your progress and where you could improve.

Leveraging these findings effectively can turn what is often considered a difficult experience into an invaluable asset for enhancing both business processes and financial health.

If you’d like more advice on the audit process, speak to one of our team.