Internal Audit For Small Businesses

As your business grows you will need to determine whether it will benefit from setting up an internal audit function. Internal can form an integral part of a business as the department will be dedicated to reviewing internal processes and controls. Effective use of internal audit can add value to the business.

All major companies have an internal audit function. Most companies will require basic assurance over the key processes together with a documentation of the key internal controls affecting the business.  The internal audit department is normally responsible for developing the Risk Matrix for the business and carrying out control reviews and branch visits. The department will focus on process improvements and for larger companies will report their findings to the Audit Committee. The most significant value add is delivered in the form of process recommendations reported to management.

For big companies, there is a major focus on avoiding surprises, particularly when reporting to the market. Most companies suffer from unwanted shocks during their lifetime and an internal audit function could help to alleviate the risk of any major setbacks arising from deficiencies in the internal control environment. SuperGroup for example suffered from reporting errors in its financial reporting to the Board. The problems arose from poor internal control over the financial reporting process and resulted in significant damage to the reputation of the CFO together with a large drop on the share price.

Internal audit must be thought of as a partnership with the business. It is significantly different from an external audit as the staff are employed directly by the business and can add significant value through process improvement.

Highlights Of The Year 2013

Here are our picks of the business news and highlights of the year 2013:

December 2013

- 2013 ended with the FTSE 100 recording it’s biggest rise since 2009

- BOE withdraws Funding For Lending Scheme For Homebuyers

- Shoppers Suffer from Computer Failure at RBS Bank on Cyber Monday

November 2013

- Twitter shares up 73% on day of flotation

- BSkyB’s shares fall over 10% after BT secures Champions’ League deal

- ECB cuts interest rates to 0.25%

October 2013

- US in danger of economic shutdown as nation approaches its debt ceiling

- Royal Mail shares up 36% after floatation

September 2013

- Federal Reserve announce that their $85 billion a month Quantitative Easing programme will not be “tapered” as originally planned.

- Angela Merkel re-elected as German Chancellor.

- UK economy shows signs of recovery, particularly in the housing market.

- Demand for IT contractors rises significantly in London

August 2013

- Eurozone and US economies come out of recession.

 

July 2013

- Mark Carney issues “forward guidance” over interest rates which are not expected to increase till 2016.

- Glaxo Smithkline accused of bribery in China

June 2013

- Stephen Hester stands down as chief executive of RBS.

- Fed indicates that it will “taper” its QE programme. The UK stockmarket dropped 3% following the announcement. A similar drop in the US markets indicates that the bull run may well be over.

- The Co-operative Group, owners of Britain’s biggest mutual bank announced that it will seek privatisation after identifying a £1.5 billion capital shortfall in its accounts.

May 2013

-The European Central Bank (ECB) announced it was lowering the central bank lending rate to 0.5%.

- The ECB lowered its growth forecast for 2013 to -0.4%, down from 0% previously.

- Yen continued to devalue as the effects of Japanese monetary easing continue.

April 2013

- From 6 April 2013, all employers will be required to submit Real Time Information (RTI) returns to HMRC. UK contractors and small businesses will need to ensure that they have appropriate payroll systems in place.

- The personal allowance will increase to £9,440 for the tax year 2013/14 and the basic rate limit will be set at £32,010.

- From April 2013, unlimited income tax reliefs will be capped at the greater of £50,000 or 25% of income.

- Bank of Japan announces plans for a huge increase in monetary easing to tackle deflation.

-The stock market continued its bull run with the S&P 500 reaching an all time high this month together with the FTSE100 reporting a record 11^th consecutive increase month on month.

- UK government launches it’s Help to Buy Scheme in a bid to stimulate the UK Housing market.

- Over 1,000 workers were killed when the Rana Plaza factory in Bangladesh collapsed. The factory manufactured clothing for a number of major global corporations.

March 2013

- Dow Jones hits an all time high. Equity markets are boosted through increase in confidence.
- Cypriot government announces plans to introduce a levy on all bank deposits in order to secure an EU bailout for its troubled banks. Banks in Cyprus were closed for over a week to prevent bank runs.

February 2013

- Moody’s downgrades the UK’s AAA credit rating.

- UK retailers found to be selling horsemeat in burgers and ready meals.

- From 1 February 2013, the pensions auto-enrolment will be required for employers with over 20,000 employees.

January 2013

- US Fiscal Cliff averted in the final hours of the 1 January deadline. The decisions over the debt ceiling and future tax cuts have been pushed back to March.

- Global markets reacted positively to the news on the US Fiscal Cliff with a surge in the markets on the first day of trading 2 January 2013.

- Introduction of The Retail Distribution Review (RDR) meaning that Independent Financial Advisors can no longer be paid commission by the providers of financial products.

- The new high income cap on child benefit came into force from 7 January 2013. Individuals earning between £50,000 and £60,000 will be affected by a gradual reduction in the benefit. The benefit will be withdrawn entirely for those earning in excess of £60,000 per annum.

- From 1 January 2013, the Annual Investment Allowance (AIA) will increase from £25,000 to £250,000 per annum for a two year period.

- The new CFC regime comes into force for accounting periods beginning on or after 1 January 2013.

- Belsize Accountancy Enters Partnership with the NHS staff benefit scheme.

FTSE 100 Enjoys Biggest Rise Since 2009

The year 2013 ended with the FTSE 100 recording it’s biggest annual rise since 2009. The FTSE 100 closed up 17.82 points at 6,749.09 on New Year’s Eve. 2013 has ended somewhat on a high with the global stockmarkets at all time highs and the UK economy showing signs of recovery. The job market has also shown noticeable improvement with demand for interim finance professionals and IT contractors on the rise. We hope that the trend will continue throughout 2014.