Although most may consider an audit to be an intrusive and disruptive process, there are several benefits to getting one for your business.
Audits are a statutory requirement for businesses that meet two of the following criteria:
- an annual turnover of no more than £10.2 million
- assets worth no more than £5.1 million
- 50 or fewer employees on average.
That said, many businesses decide voluntarily to have an audit because of the many benefits.
An audit can help put your business and accounting processes under the spotlight and help you tighten up your organisation. Here are five benefits of having an audit.
1. Strengthening your business
Sometimes, it may not be immediately apparent that there may be an issue bubbling under the surface of your organisation, financially speaking.
An independent auditor will take an unbiased view of your accounts and financial statements to ensure your business is healthy and compliant with all the necessary financial regulations.
A financial auditor can also conduct a more comprehensive audit, by looking at your workplace practices, governance, and business systems. They will ensure everything complies with your recommended codes of practice and everything is operating in as efficient a manner as possible.
The auditor’s findings will be put into a report and discussed with you, so if anything falls below par, you know what actions you need to take to resolve the issues. All the while, you’ll know what is going well and what you need to keep doing to get to where you want to be.
Your auditor may also be able to spot risks, giving you the opportunity to address them before they become a significant issue that will be harder to recover from.
2. Transparency and credibility among investors
If your business is looking to expand, an external audit of your accounts will give you a clear picture of your financial standing and provide potential investors insight into your efficiency.
If you are doing everything right, others will be able to see that and therefore have more faith in you as a business.
The same applies to shareholders. If you’re on a board of directors, you’ll want to make sure everyone has confidence in you and your business, and has peace of mind that their investment is being well looked after.
This is especially important if the other shareholders aren’t as heavily involved in the day-to-day running of the business.
3. Improved protection against fraud
Auditors provide an additional line of defence against fraud by reviewing financial documents to investigate whether everything is as it should be.
If any red flags appear during the process, then they’ll identify them, deal with them and advise you on how to spot them in future.
Data analysis from an audit will help identify trends and patterns which could result in discovering fraudulent activity within your business.
Overall, an audit will help provide the basis for stronger internal security, which will prove invaluable.
4. Increase your value
When valuing a business, there are many contributing factors. The systems and controls you have are a big part of that.
If an audit finds you are compliant and financially disciplined, this will show buyers and investors you’re a low-risk proposition. If they can see your business is well-run, it will prove to be a good return on investment.
Audits will also provide an accurate account of how much money your business is making, which is important when determining value.
5. Helping you make commercial decisions
Once you’ve received feedback from the auditor, you’ll have a deeper insight into your business’s framework and finances.
If you’re satisfied with how things are running and have thought about expansion before, this will allow you to follow up on those ambitions.
As you’ll have a better understanding of your cashflow, you can look into investing in marketing, expansion or other steps to improve your standpoint in your market.
The audit experts at Nicholas Peters are on hand to answer any questions on how volunteering for an audit could benefit your business. Get in touch today.