Is your house in order in tough economic times AND ready for the future?

Business Team Evaluating ProceduresGiven the global economic changes, downturn and risks, now is the best time to conduct a business review so that your business is prepared for the challenging and unpredictable times ahead. In fact, PriceWaterhouseCoopers, LLP is advising that audits of organization systems, policies and procedures in a number of key areas is more critical now than ever before.

A sound and thorough audit can ensure you are doing everything you can to manage through the U.S. and world economic situation and be prepared for the future with a focus on cost containment – but not cost containment at any cost.

Here are some of the areas recommended for in depth reviews with an eye on both cost containment and future needs:

Review contracts with suppliers of goods and services with an eye on cost savings, but before cancelling present contracts and finding new suppliers, ascertain the full financial impact. Try renegotiating rates with current suppliers if you are happy with their services.

Credit is hard to come by these days, so a really clear financial assessment of liquid and non-liquid investments, current and anticipated cash position, accounts payable and accounts receivable processes is a critical financial audit task.

In your human resource strategy it becomes incredibly important to evaluate potential layoffs in terms of the expense to replace the most experienced people when the economy upturns. Looking at the cost now only can be a hazard when your business needs to grow.

It just makes sense that business can expect more fraud over the next few years due to both the financial situation of individuals and the broader scope of work tasks for employees and contractors. Audit activities will have to include a close look at company antifraud measures especially in high exposure areas

Promoting an eco-friendly and green business can be a cost-effective strategy to attract client attention in an environment that is concerned with the environment and global warming. Your auditor should be able to review your status in this area for possibilities.

If you are halting any major projects to save money, be sure to audit this strategy to make certain it makes sound economic sense and is not based on a short term reaction. Review what plans you have made to be sure you can leverage the past work when your projects are restarted.

Foreign exchange exposure for international businesses is a critically important area to review so that you can reduce your exposure to the constantly changing value of foreign currencies.

Carefully evaluate any plan to sell off assets as it may end up costing you much more later to replace in a better economy, and don’t neglect necessary maintenance on current assets as the cost to repair or replace may be prohibitive.

Search for innovative ways to manage and move products and raw materials so that you can manage inventory with cost containment in mind.

Now might be the time revisit credit limits for higher end customers and to study what credit policies provide the most safety for your business.

(Note: This article is a synopsis of PricewaterhouseCoopers, LLP Advisory Risk Group entitled “A New Strategic Position: Redefining Internal Audit In An Economic Downturn”)

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