A Small Business Guide to a Successful Internal Financial Audit
You don’t need to wait for an external auditor to find the cracks in your business.
A simple internal financial audit (or internal review) is one of the smartest things a business owner can do to keep the business profitable, compliant, and in control.
It’s not about red tape — it’s about clarity, accountability, and protecting your hard work.
- Why an Internal Audit Matters
An internal audit is a proactive review of your business finances — led by your accountant, bookkeeper, or advisor — to check that your records, systems, and controls are accurate and reliable.
It helps you:
- Identify leaks and inefficiencies early.
- Make better decisions based on clean numbers.
- Strengthen cashflow control and reduce compliance risk.
- Build confidence with banks, investors, and the ATO.
Think of it as a financial “health check” — catching problems early before they turn into crises.
- When to Conduct One
For most small businesses, a full internal audit or financial review should happen at least once a year, ideally before tax time or after a period of strong growth or change.
You should also consider a review when:
- Your turnover or staffing has grown quickly.
- You’ve changed systems (e.g. moved to Xero or new payroll software).
- You’ve had issues with cashflow, GST, or payroll accuracy.
- You’re preparing for finance, investment, or sale.
- What to Review
An internal financial audit should focus on the areas that matter most to small business health:
Financial accuracy
- Bank, payroll, GST and super reconciliations.
- Revenue and expense allocations.
- Loan balances and asset schedules.
Cashflow management
- Debtors and creditor follow-up processes.
- Timing of invoices, payments, and BAS lodgements.
- Working capital and cash reserves.
Compliance checks
- Payroll and super obligations.
- BAS and tax return consistency.
- Record-keeping and documentation standards.
Internal controls
- Authorisation of payments and access to accounts.
- Segregation of duties (where possible).
- Data backup and cyber-security procedures.
- Who Should Lead the Process
You can do a simple review internally — but for best results, involve your external accountant or advisor.
They bring objectivity and experience across hundreds of businesses, helping you spot issues you might overlook.
At AD Partners, we typically:
- Review your financial systems and reconciliations.
- Test a few key transactions for accuracy.
- Highlight risks, inefficiencies, or missed deductions.
- Provide practical recommendations — not just theory.
- Turn Insights Into Action
An internal audit only adds value if you act on it.
After the review, prioritise your findings:
- Fix high-risk issues first (GST, super, missing reconciliations).
- Streamline admin and reporting processes.
- Automate repetitive tasks where possible.
- Schedule regular check-ins so improvements stick.
- The Payoff: A Stronger, Smarter Business
Businesses that perform internal reviews regularly enjoy:
- Clearer visibility over profit and cashflow.
- Fewer surprises at tax time.
- Lower ATO risk and better funding prospects.
- More time spent running the business, not fixing problems.
Summary: Internal Audits Create Financial Confidence
A good internal audit isn’t about compliance — it’s about control.
It gives you the confidence that your numbers are right, your risks are managed, and your business is running efficiently.
If you’d like to know what an internal audit would look like for your business, we can tailor a practical review process that suits your size, systems, and goals.
