Beware the auditor who insists that you keep your chart of accounts in tax-return sequence or in alphabetical order with no numerical codes. In effect, he is having you maintain your books for his own convenience in preparing his report and your tax returns. Aside from those documents, you are not likely to get anything of value from the relationship -- certainly not insight into the finance of your company. As a result, you may wind up making serious, and avoidable, mistakes due to a lack of reliable information.
The solution is to find an auditor who will help you set up sound financial reporting systems, with information updated on at least a monthly basis. If you have a bookkeeper handling your finances, you should insist that the auditor help train that person to monitor the key variables in your business. "In the long run, the best answer is to develop your own in-house financial expertise," says Robert Kelly, president of C.E.O. Consulting Services Inc., in Peabody, Mass., and a CPA.
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