The vicissitudes of change and modern technological advances have driven demand for increased transparency. Businesses are required, and expected, to disclose more information about their taxes, financial records, operations and executive salaries. Although private companies are spared the intense scrutiny of professional auditors and are not required to provide an external review of their financial statements, business leaders should consider the advantages of having an external audit.
An External Audit Is Smart Business
Your business should consider an audit for the following reasons:
- Audits improve functioning of the business. Objective scrutiny of a business’s operations leads to creative improvements and controls, which result in better products and services and a fatter bottom line. Just as regular tuneups improve an automobile engine’s functioning, the external audit achieves similar results by improving a company’s performance by reinforcing and strengthening what works and eliminating what’s slowing a business down. Internal controls are scrutinized to ensure that they’re achieving their goals and whether timetables and stakeholders’ interests and goals are being achieved.
- All companies, regardless of size and industry, can benefit from an external audit. A common misconception is small companies don’t need to be audited. Auditors can identify and address potential problems that may be holding you back.
- Audited financial statements are considered more reliable. Investing in an external audit is considered a proactive strategy that improves and enhances the image of the business in the public eye. It circumvents potential mistrust that comes when information is revealed after the fact. It also gives customers or clients (existing and potential) and investors a sense of security, knowing that your company’s financial statements have gone through the audit process.
- The audit process encourages transparency. Financial statements that have been verified by an external auditor are considered more reliable in the business marketplace. External auditors are trained specifically to focus on tightening and improving business processes to reduce the amount of risk of misreporting financial data.
- External auditors have no agenda other than the truth.
- Audits foster a culture that encourages change and growth. Rather than view an external audit as a bureaucratic annoyance, managers ought to embrace the audit concept as a conduit to a stronger business, new systems and processes, all of which open the door to innovation.
- Audits lead to better hiring decisions. A company’s employees (human capital) are as valuable as its products or services and business operations. After all, their expertise, motivation and attitude affect and define the company’s culture. A careful external audit evaluates every variable in a company’s machinery.
Do you want to know more about the advantages of an audit for your business, and what it would involve? Give Vrakas a call today at 262.797.0400 and we will connect you with one of our professionals.