Why Do You Need an Audit For Your Business
What is Auditing
Auditing, an accounting term refers to examining the financial practices of a business, company or organization to make sure that it follows accepted accounting principles as well as to spot potential and real issues. This helps find errors, fraud and specific performance trends. An internal audit might be more forensic, spotting issues and opportunities with your policies and procedures depending on the expertise of your accountant, while an external audit might focus on verifying your numbers that you are following standard accounting procedures.
Why Does Your Business Need an Audit?
Here are some good reasons:
- Investors, creditors and lenders may need to know the state of your company’s current financial condition so they can make their financial decisions accordingly. Therefore, your bank could request an audit at your expense.
- In unique industries an audit may be needed because of regulation, such as manufacturer companies that sell their products to the government.
- For many reasons, the business owner(s) may make the decision to have an audit, particularly in a situation where the owner of the company who has a company in the United States, but lives in a different country.
- Another reason that a business owner may choose to have a company audit is succession planning is. When making a business for sale, having good financial is very vital.
After completing an audit examination, the auditors prepares a short report stating whether the company has prepared its financial report according to the appropriate accounting and reporting standards. Remember, the audit needs are different, depending on whether your business is private or public.
Companies or organizations whose ownership and debt securities such as stock shares and bonds are traded in public markets are required to have annual audits by an independent CPA firm.
Although it doesn’t need audits for private businesses, but banks and other lenders to private businesses can insist on audited financial statements.
Remember, audits aren’t cheap, and it is not easy to do an audit of even a small business in less than 100 hours. But, there are a lot of audit service companies in India, for example, Audit services in Pune that are providing auditing services at very affordable prices. Do some research over the Internet before making your decision on any service provider? Go through the website of the audit service company and check everything.