Get your company finances in order through regular auditing
What is an audit and what does it involve?
Just hearing the term “audit” can produce anxiety in most of us. Opening your doors and more importantly, your financial records, to an outside party for the examination can be daunting. As a busy small company owner, you might not think you have enough time for an audit, or you could be self-conscious about your record-keeping or processes. But it’s an important process to follow and if done regularly can produce multiple benefits for you and your business.
An audit’s goal is to develop an impartial opinion on the audited entity’s financial statements. The opinion covers whether the financial statements present an accurate and fair picture and have been produced correctly in compliance with accounting rules. It is a common assumption that auditors must detect all errors. They are, however, just in charge of identifying material misstatements, not all of them.
In the world of auditing, there are three main types: external audits, internal audits, and Internal Revenue Service (IRS) audits. An unqualified, or clean, audit opinion means that the auditor hasn’t found any issues as a result of their review of the financial statements. External audits can include a review of both financial statements and a company’s internal controls. And internal audits can serve as a managerial tool to make improvements to processes.
Experts in auditing like Mitchell Charlesworth, understand that Audit and Assurance can be a complex area of our business and so have ensured that their team are more than capable of completing these tasks in the most efficient way possible.
The benefits of regular auditing
Although at first, this can be a bit scary, regular auditing can actually provide your business with a range of benefits! Regular auditing can help ensure account correctness. Thanks to the detailed analysis of all accounting books, auditors can find out the accuracy of a company’s financial statements and records, and make sure you fulfil all statutory requirements.
Another significant benefit given by the auditing process is the regular maintenance of all accounts. It monitors the accuracy of accounts and raises concerns if they are not kept properly. This also keeps the employees from making mistakes or committing fraud. Any employees labour effectively in their roles, fearful that auditing will uncover all abnormalities. Therefore this process helps to detect errors and prevent fraud, reducing the chances of overall risk to the company.
Stakeholder confidence can be gained via auditing statements. All stakeholders, including creditors, stakeholders, banks, and investors, have higher faith in the company’s audited financial records. Transparency is at the heart of every audit, whether internal or external. Nothing bothers stakeholders more than not understanding the genuine status of any firm in which they own stock.
Auditing reports may be used to quickly get cash from a variety of financial institutions. These reports show investors an organization’s genuine financial status, which assists them in determining the legitimacy of the company. This helps lenders remain satisfied that nothing is wrong. Because few businesses rarely face financial difficulties and company loans are prevalent, audits can help lenders feel more confident when you do need to borrow money.
It’s entirely possible that ‘the taxman’ can request an audit from any auditor they like. One reason your firm would want to have frequent internal audits is to prevent being audited by the IRS.
Regular audit analysis gives the measurements required for future investment and expansion. Audits can reveal where losses are occurring and why a business is losing money. They can also highlight areas of strength in which a company should spend more aggressively in the future. The goal of any firm is to make a profit, and the higher the profit margin, the better.
Lastly, audits can provides valuable information to managers for efficient decision making. Auditing is done by various experts of account and finance who have detailed knowledge of subjects, so they provide advice and resolves all problems.