After a business crisis, it’s natural to want to return to normalcy. However, the truth is that the business landscape often shifts in unexpected ways, and it’s not always possible to simply return to “business as usual.” 

This is particularly true for businesses in professional services such as accounting practices, where external factors, whether financial crises, changes in regulations, or even internal challenges, can create lasting impacts.

After a crisis, it’s vital for business leaders to take a step back and perform an internal audit. This process helps identify any vulnerabilities, gaps, or flaws within the business structure that may have been exposed or worsened during the crisis. Conducting a thorough audit enables you to make the necessary adjustments to ensure resilience and long-term success.

What is a business crisis?

Before diving into the specifics of internal audits, it’s important to define what constitutes a “business crisis.” In the context of an accounting practice, a business crisis can take many forms. It could be an economic downturn, a sudden loss of clients, a failure to adapt to technological changes, or even internal struggles such as leadership conflicts or staff turnover.

The impact of a crisis can ripple throughout the entire organisation. For example, an economic downturn can lead to cash flow issues, client losses, or changes in demand for services. A regulatory change might leave your practice scrambling to comply with new rules, causing operational disruptions. The COVID-19 pandemic is a prime example of how unforeseen global events can force businesses to adapt quickly or face devastating consequences.

These crises, both common and uncommon, affect more than just the immediate financials—they can also damage a business’s reputation, create uncertainty among staff, and shake leadership confidence. This is where an internal audit becomes critical.

What is an internal audit?

An internal audit is a comprehensive review of your business’s operations, financials, compliance, and risk management procedures. The goal of an internal audit is to assess whether your business is functioning as it should, identify potential areas of weakness, and uncover any inefficiencies or risks that may have been overlooked.

Internal audits often focus on several key areas:

1. Financials and accounting: This includes reviewing financial records to ensure accuracy, compliance with regulations, and efficiency in managing resources. Audits help detect discrepancies, fraud, or poor financial practices that could jeopardise your practice’s future.
   
2. Operations and processes: Reviewing business operations is essential for identifying any processes that are not performing optimally. This could involve evaluating staff workflows, client communication methods, or how your firm delivers services.
   
3. Risk management: A thorough risk assessment should look at all potential threats to the business—be it financial, operational, or external factors such as market shifts. This allows businesses to implement better safeguards against future crises.
   
4. Compliance and regulatory adherence: Especially for accounting practices, maintaining compliance with industry regulations and standards is vital. An audit ensures that all legal obligations are met, reducing the risk of penalties or reputational damage.

Auditing involves systematically evaluating a company’s records and practices to ensure accuracy, fairness, and transparency. It’s a process that should not be limited to just financials but should extend to operations, compliance, and risk management across the organisation 

However, not everything should be audited. For example, strategic planning and high-level visioning may not be directly scrutinised during a regular internal audit unless those elements contributed to the crisis. The focus of the audit should be on areas where tangible, actionable improvements can be made.

How to conduct an internal audit

Conducting an internal audit after a crisis requires a structured and systematic approach. 

Here’s a step-by-step guide to get you started:

1. Assess the scope of the crisis

The first step is to thoroughly understand the crisis you’ve faced. Did it affect your revenue streams, disrupt operations, or impact your staff? 

Identifying which aspects of your business were most impacted will help you determine where the audit should focus.

2. Review financial and operational data

Once you’ve assessed the crisis’s impact, it’s time to dive into your financial records and operations. This includes checking for discrepancies in billing, client payments, and expenses, as well as identifying any inefficiencies in your business processes. 

It’s also important to evaluate whether your current technology and tools are meeting your practice’s needs effectively.

3. Identify and evaluate risks

A thorough audit also requires identifying potential risks that may have emerged as a result of the crisis. This might involve revisiting your risk management procedures and adjusting them to better handle future challenges. 

For example, if your practice’s cash flow was heavily impacted, you may need to reassess your pricing structure, payment terms, or client base.

4. Check compliance and legal obligations

For accounting practices, compliance with industry regulations is non-negotiable. Conduct an audit to ensure your practice is up to date with all relevant laws, such as tax regulations, financial reporting standards, and data protection laws. 

An audit can reveal areas where compliance might have slipped or where adjustments need to be made.

5. Engage stakeholders in the process

An internal audit is not a one-person job. Involve key members of your leadership team, department heads, and even staff to gather diverse perspectives on potential issues. 

This helps ensure the audit is comprehensive and that all areas of concern are covered.

6. Implement corrective actions

Once the audit is complete, it’s essential to implement the corrective measures identified. This could involve streamlining processes, investing in new technology, updating compliance protocols, or even restructuring certain aspects of the business. 

Remember, an audit should lead to real, actionable changes that improve resilience and performance.

In times of crisis, the ability to adapt and build back stronger is what separates successful businesses from those that falter. 

For leaders of accounting practices, this means conducting an internal audit after the dust has settled. An audit helps identify the weaknesses and vulnerabilities exposed by the crisis, enabling you to put in place strategies to safeguard the future of your business.

Remember, the end goal is not simply to return to business as usual, but to emerge stronger, more resilient, and better prepared for any challenges ahead. Leaders who take the time to assess their practices, improve processes, and implement the necessary changes are more likely to succeed in the long run.

We understand that navigating through crises requires thoughtful leadership. 

If you’re ready to take your practice to the next level, book a call with us to learn how we can help you lead your team through change and position your business for sustained growth and success.