An external audit of a business is usually conducted by a major auditing firm like RSM, and involves them going through the business’s accounting records and processes to ensure that they are all accurate and correct.
This brings with it a number of benefits which can help the business move forward and ensure that it is on the right track financially. Here are some of the major benefits of receiving an audit.
Ensures Accounting is Correct
Businesses are now held strictly to account for their actions and financial responsibilities, meaning there is a lot of pressure for them to be able to present accurate and detailed information about their dealings.
Most serious businesses/business owners will have an accountant, but this does not mean that mistakes aren’t made in the accounting processes. A professional auditing firm will go through tax reports, accounting records and other financial information meticulously, and they can then educate the business owner/owners on best practices and point out ways they could improve their accounting processes.
Reassures Shareholders
Given that shareholders of a business are some of the most important people involved in a business, it makes sense that they should always be updated and satisfied with how the business is proceeding.
Nowadays, shareholders greatly value audits, as they can back up (or contradict) any claims/reports made by the business owner, and help them ensure that their investment in the business is safe. A business which has had an external audit done can also show the report to prospective investors to prove that they are investment worthy, as well as corporately responsible.
Ensures Legality
Businesses are tightly regulated these days, and for good reason. As business’ profits grow each year, so too its financial power and responsibility. The amount of tax it will have to pay will also increase and those which try to avoid this will be on the wrong side of the law.
An audit will ensure that your business avoids any difficult legal situations for not paying the right amount of tax or using sub-standard accounting practices, and help give the business owner peace of mind that their venture is backed up by an external, professional auditing firm should they be accused of malpractice.
All in all, an audit is a fairly crucial part of business operations these days. As such, as a business owner, you should look at which firms may be able to provide you with a cost effective, professional service.
