Financial audits take a deep dive into accounts to understand income statements, cash flow statements and balance sheets.
Audits are required by law in a few scenarios, such as when HMRC requires one for tax compliance, a ‘tax compliance check,’ or if a business is sufficiently large to require audits by law.
However, it’s also common to undertake voluntary audits to gain a comprehensive objective understanding of a business’s financials.
So, why should you consider a voluntary audit?
Boost stakeholder confidence
A complete, transparent account of a business’s financials can be vital for building your stakeholders’ confidence in your company.
Whether it’s investors eyeing your revenue reports, creditors scrutinising your solvency, or your employees wanting to understand the business’s performance, audits can help everyone know where they stand.
When you arrange a voluntary audit, you need to appoint an independent body to put their stamp of approval on your statements. This third-party verification can give your business more credibility.
With the newfound clarity and transparency an audit can bring, stakeholders might be more willing to back your future endeavours. This could help you secure more favourable loan terms when you need funding.
Virtually every business has weaknesses – areas of vulnerability that could manifest as more serious issues further down the line. An auditor can use their expertise to flag these problems before they get worse, allowing you to manage risks more effectively.
One of the key areas an audit examines is your financial reporting processes. Are they robust and accurate? Are there loopholes or weaknesses that are vulnerable to errors? It’s better to find out in a controlled setting than invite nasty surprises down the line.
Lastly, while an audit is about more than just compliance, undergoing a voluntary audit now can make it easier to comply with statutory audits in the future. Ensuring you’re up to date with your regulatory obligations can save you expensive penalties and reputational damage.
Make informed decisions
In today’s data-centric business environment, leveraging accurate and actionable information is a necessity for survival and growth.
When we’re overwhelmed with data points from multiple sources, audited financial statements serve as a reliable foundation for crucial business decision-making:
- Strategic planning: By providing a verified snapshot of your business’s financial position, an audit objectively informs your strategic planning process.
- Setting KPIs: An audit gives you the data you need to set realistic yet challenging KPIs, aligning your team’s efforts with your business objectives. This is crucial for business leaders planning to expand their offering or grow their company.
Boost operational efficiency
Inefficient financial processes can become difficult to manage if left unchecked. Audits offer an excellent opportunity to dig deep into your business operations, allowing you to make improvements earlier on.
By scrutinising supply chains, for example, an auditor can reveal where you might be incurring extra costs or where there are inefficiencies in your procurement processes. Perhaps it’s time to renegotiate with suppliers or consider alternative sourcing options?
Additionally, pinpointing areas where you could improve your operations can help you find new ways to boost profitability.
Extra assurance for complex transactions
Navigating the complicated world of mergers, acquisitions, and corporate restructures can be a headache. These high-stake transactions are often fraught with unseen complications and obstacles — but audited accounts can simplify this process, providing complete transparency to all parties, helping make transitions smoother and less stressful.
In some cases, you may be required to undergo an audit for due diligence purposes.
Strengthen your corporate governance
Corporate governance isn’t just for C-suite executives. A robust governance structure impacts everyone from shareholders to junior employees, and can also affect your brand’s image.
- Ethical conduct: Audits can highlight areas where governance may be lacking, helping to instil a culture of transparency and ethical conduct throughout the organisation.
- Alignment of interests: Effective corporate governance seeks to align the interests of management and shareholders. Audits ensure accountability, preventing the misalignment that can lead to corporate scandals or financial downturns.
As you can see, voluntary audits have several important roles that benefit businesses. While voluntary audit services may seem like an unnecessary expense, the insights gained can act as a platform for future growth, increased stakeholder confidence, and ultimately, an edge over the competition.
Get in touch with us today to find out more about our bespoke audit services.