How to Conduct a Mini Internal Audit for Your Business

From the Desk of a Filipino Accountant Who Helps Business Owners Stay in Control Before a Crisis Hits

As an accountant working with Filipino business owners, I’ve seen how easily financial issues can slip through the cracks—unnoticed expense leaks, undocumented transactions, cash shortages, and even unnoticed internal fraud.

But I’ve also seen how powerful it is when a business owner takes initiative and says:
“Let’s check where we stand before the BIR—or the problem—comes knocking.”

That’s what a mini internal audit is for.

This blog will walk you through how to perform a simple, effective internal audit—even if you don’t have an internal auditor. It’s designed for business owners like you who want clarity, control, and confidence in how your business is really operating.

🧠 What Is a Mini Internal Audit?

A mini internal audit is a simplified review of your financial and operational systems. It's not as complex as a full audit—but it focuses on the critical areas that affect your money, compliance, and risk exposure.

As your accountant, I help clients use this lean season to spot red flags, tighten controls, and update documentation—all before tax time or an actual audit becomes a concern.

✅ Why Conduct One?

Here’s what a mini audit helps you do:

• Detect missing or misfiled receipts

• Identify expenses with no documentation

• Check if reports match actual cash and inventory

• Find inconsistencies between books and tax filings

• Strengthen internal controls to prevent future mistakes or fraud
  
  

🛠️ How to Conduct a Mini Internal Audit in 6 Simple Steps

1. Review Your Bookkeeping and Tax Reports

Open your books, ledgers, or software, and check:

• Are all income and expenses recorded?

• Are there large or vague entries like "miscellaneous"?

• Do the totals match your BIR tax filings (e.g., 2551Q, 1701Q, 2307)?

📌 Tip: Create a checklist to compare quarterly sales per book vs. per return.

2. Spot Check Documentation

Pull a sample of 10–15 transactions from the last 3 months. For each:

• Is there a valid OR or SI?

• Is it correctly posted in the books?

• Does the amount match the official document?
  
  

📌 Red flag: If 3 or more have no supporting document—your system needs improvement.

3. Reconcile Cash and Bank Balances

Check the ending balance in your cash and bank books against:

• Your actual bank statement

• Physical cash on hand
  
  

📌 What to look for:
Unexplained deposits, delayed recordings, or “short” balances.

4. Review Petty Cash and Employee Reimbursements

Are there signed liquidation forms for all cash advances?
Are receipts attached and amounts fully accounted for?

📌 One client recovered ₱18,000 worth of undocumented reimbursements by doing this check.

5. Assess Access and Authority Controls

Who has access to:

• Cash drawers or bank accounts?

• Bookkeeping software or spreadsheets?

• Authorization for purchases?

📌 If one person can spend, approve, and record—it’s a control weakness.

6. Make a Summary and Action Plan

Create a simple report:

• What gaps or issues did you find?

• What actions are needed (e.g., file an amendment, add policies, train staff)?

• Who will be responsible?
  
  

Share this with your accountant—this is how we can help you improve, not just react.

📈 Bonus: When to Do a Mini Audit

I recommend clients do a mini audit:

• After every tax season

• Before year-end closing

• Before applying for a loan or investment

• After changing staff or systems

• Anytime you feel “out of control” in your finances

👨‍💼 The Accountant’s Role

As accountants, we’re not just here to file reports—we help ensure your internal systems are working and protecting you. When I do mini audits for clients, I:

• Validate the accuracy of their books

• Detect early compliance issues

• Help fix reporting gaps

• Recommend controls that are realistic and scalable
  
  

💡 Final Thoughts: Control Isn’t About Catching Mistakes—It’s About Preventing Them

A mini internal audit is like a quick health check-up. It gives you peace of mind, protects you from risk, and helps you make better decisions with real data.

You don’t need to wait for a BIR audit or a financial crisis to fix your system.
Do a mini audit. Know your numbers. Protect your business.

And if you need help reviewing, reconciling, or systemizing—I'm here to assist.

Because a smart business doesn’t wait for problems—it checks, corrects, and grows.