Accounting is not simple maths and there is always a risk that there could be some intentional or unintentional discrepancies in your financial statements. Your financial statements tell the worth and financial position and performance of your business, therefore, it’s important that these discrepancies are detected and reconciled in your books of accounts. Although getting an accounting software or a bill counter to accurately and quickly calculate the value of the bills can help minimize the chances of human error, you should still make sure to get your accounts audited.
You must be thinking about why finance auditing is so important? Because it can either make or break your business due to the reasons mentioned below.
Keeps Frauds and Errors at Bay
Not recording that one material expense can mean you are presenting the false position of your business, whether it’s deliberate or not. And this must be addressed as it can lead to unrealistic planning and decision-making which may harm your business in the future. Also, the goodwill of your business can be adversely affected.
An auditor will go through every element of your financial statement and trace its source and evidence and will tally the results with trial balance to ensure your financial statements present a true and fair view of the company.
Auditing Will Affect Your Stakeholders’ Perspective
A business with audited financial statements will be more attractive to investors, customers, or banks than the unaudited one. The fact whether a business is audited or not allows the stakeholders to develop clear expectations related to it and determines how risky the business is.
For instance, as the shareholder is not active in the daily operations of the business and the control is handed over to the directors, audited financial statements by the end of the year can give shareholders assurance that their investment is not being mishandled.
Likewise, a bank’s decision to lend a business loan also depends on how true a company’s financial statements look i.e., by auditing.
Enhances the Value of the Business
If you would like to sell your business in the future, you should know that the companies who don’t get their accounts audited on a consistent basis find the entire process nerve-wracking and time-consuming. Whereas, the ones that are audited seem to go through a seamless process and attract the buyers on the market as well. They are then even willing to pay an increased price for it.
Increases the Efficiency of Your Business Processes
With so many other tasks to handle, if your workers aren’t able to run the operations of your business smoothly, your business may soon face a downfall.
As auditors not only check your financial accounts, they also go through your internal controls and processes and even give a piece of advice to optimize your business processes. This will help you make your business’s base stronger to ensure the top-tier processes work smoothly as well.
Ensures Regulatory Compliance
No matter in which country you run your business, there are some laws and regulations to follow which would otherwise deter your business from operating.
Auditing ensures that you meet all the updated federal regulations, and analyzes the risk of non-compliance in your system. It is then reported to the appropriate level of management in the company to keep the company robust and successful.