For many business owners, the thought of having a financial audit done on their company can be quite stressful. The reality is, while it can be stressful preparing for the audit, the audit itself can be very beneficial for strong business operations and accurate financial reporting. Below are a few benefits of having your business’s financial statements audited:
There are frequently mistakes within client or vendor payments that may not be found until the books are audited. An example may be that it looks like a customer has not made a payment, when actually the customer had made a payment which was recorded into the wrong account. While an audit does not examine every transaction in a company’s records, an issue like this has a greater chance of being found during an audit.
Improving Financial Reporting Processes
Audits can also help identify gaps in a business’ financial reporting processes. Ultimately, once these gaps are corrected, the potential for error in financial reporting can be reduced. When eliminating potential errors found during an audit, it’s common to see an improvement in company productivity afterward, such as less time spent correcting misstatements.
Accuracy of Statements and Returns
An auditor’s job is to evaluate the likelihood of misstatements and audit the areas with the highest chance of error. The users of the audited financial statements gain comfort that the numbers are materially accurate and in compliance with accounting standards. Banks who have lent money to the business also feel more confident about the reported results of your business.
Other Audit Types
Internal audits can also be conducted in areas of operational compliance; an example is sales tax compliance. Think of this as a consulting appointment where the auditor examines sales tax processes and compliance with the various states and municipalities where business operations are conducted and suggests in a written report to management tactics to optimize compliance and reduce risk.
The above tips are meant to help you as a business owner understand the benefits of an audit. They are an excellent way for any business to gain more control over their financial situation. A financial statement audit can certainly be helpful to a small company and also give assurances to stakeholders.
If you or someone you know owns a small business and is looking for an audit or similar type compliance review, contact us at Davie Kaplan CPA’s and we will help you stay in compliance. Visit us today at https://www.daviekaplan.com/services/accounting-and-auditing .