Financial statement audits, or an impartial inspection and review of a company’s financial statements, are examples of auditing. In most cases, it’s done by a third-party contractor. Internal auditors and government entities such as the Internal Revenue Service conduct audits in some cases (IRS).
There are three main types of audits:
- Internal audits
- External audits
- Government audits
Reasons Your Business Needs A Professional Auditing Service
Auditor services are no longer limited to large, faceless businesses. Closely run, family-owned companies and non-profits see the benefits of employing a statutory auditor to audit their books and confirm their financial status more than ever before. The high-quality auditor aids in the prevention of potentially disastrous issues. Here are four reasons why you should work with an auditor as soon as possible.
- Assess Business Efficiency
Rapid expansion can cause a business owner to lose control of operations, and productivity can suffer as a result. An audit identifies areas of inefficiency in your business and assists you in making changes. Auditors examine the income statement by looking at how the cost and revenue balances have changed over time.
Assume, for example, that over the past three years, labor costs have risen at a much faster pace than revenue. A trained auditor may use an income statement analysis to investigate the cause of the cost rise. The findings can be used to come up with a long-term solution.
- To Evaluate Risks and Projects Assets
Through a comprehensive risk assessment, audit services assist management and stakeholders in defining and prioritizing risks. A risk assessment will assist in identifying any environmental gaps and allowing for the implementation of a remediation plan.
Your audit service provider will assist you in tracking and documenting any improvements made to your environment, as well as ensuring that any risks discovered are mitigated.
- Earns Your Business More Credibility
An audit report would be considered more reliable than an internal audit result, whether you need auditing for investment, presentations, or IRS purposes. This is primarily due to a lack of prejudice. When people know that your audit report was written by someone who isn’t directly affiliated with your company, it gives them a sense of honesty and accountability. In other words, you’re making your business seem as though you have nothing to hide in terms of finances.
- Fraud Prevention
You may be delegating much of the work involved in running a company as a business owner. While it’s critical to have confidence that workers can carry out their responsibilities with fairness and dignity, it’s vital to have a “trust but verify” mentality. Audits are a method of preventing fraud. Employees are sent an important message when an organization implements strict internal controls and performs both random and routine audits. Knowing that the company cares for and is actively working to protect company assets will effectively prevent an employee or an outside vendor from contemplating theft or fraud.
As an entrepreneur, you must comply with a slew of government regulations, including registrations, taxes, and other legal requirements. Overall, the most exhausting aspect of the operation has to complete all clerically. If you need to manage the audit reports regularly, outsource the job to a competent audit service.