You might think an audit is the last thing your business needs. Perhaps you are worried that arranging one may be disruptive to the current running of your firm, but they aren’t always bad.
Generally, all listed companies are subject to an audit every year. According to the official GOV website, private companies aren’t obligated to be audited, however, it can be hugely beneficial for your small business if you are. Any business owner may request a professional financial audit at any time.
If you’ve never had an audit before and you’re trying to decide whether or not to do so, here is everything you need to know beforehand, including reasons why an audit could be advantageous to your business.
What Is An Audit?
An audit is the inspection of the financial report of a company. It’s presented as an annual report by someone from the business itself. The financial report includes an income statement, a balance sheet, a statement of changes in equity, a cash flow statement, and a summary of any other significant accounting notes that may be relevant. When looking into your businesses report, auditors must follow official auditing standards which are set by a government body. Once the audit is complete, your auditor will provide you with an overview of what conclusions they have drawn from their inspection.
What Is The Purpose Of An Audit?
The overall purpose of an audit is to ensure that financial statements are correct and that nothing has been falsified. During an audit, an auditor assures investors that all the books within your business are accurate and that you are doing everything you should be. This is the easiest way to make investors feel more confident about doing business with you. Getting an audit is all about complete transparency, which in turn can help your company benefit from investors.
What Type Of Audits Are There?
There are 3 main types of audit that can benefit your small business:
Financial Statement Audit – this type of audit provides assurance about your organisation’s financial information, entailing a detailed test of all accounts and records to demonstrate that your business is compliant with all of the necessary governing body requirements.
Attestation Engagements – this type of audit provides verification of your organisation’s financial data and any other relevant notes to support this.
Financial Statement Review – this type of audit provides assurance that your business is running as it should whilst also helping you to locate areas that need improvement across your business as a whole.