More than ever, family owned businesses (not just large corporations) are seeing the benefits of having an external auditor review their business and confirm their financial standing. Day to day accounting practices may not always bring to light underlying issues such as fraud or regulation non-compliance, especially as your business grows.
Here are six reasons why you might want to partner with an external auditor sooner rather than later:
1. Legislative compliance– your business may be required to have an external audit due to government regulations such as Australian Securities and Investments Commission rules regarding large companies or foreign ownership etc. However, even if it is not mandatory to lodge audited accounts with an external party, an external audit can ensure that you are complying with the various state or federal legislation applicable to your business. This independent review can give you surety that your business is complying with regulations.
2. Good governance– having an external audit shows to the outside world that your business strives to achieve the best standards possible. Also that the business is not concerned by the scrutiny an external auditor will bring to the financial and non-financial affairs of the business. This is even more relevant when the business involves non-related shareholders/investors. Additional comfort can be provided to the non-related parties or silent investors that the business is being conducted in accordance with correct principles.
3. Fraud Prevention– whilst we all like to think as business owners we only hire the most trustworthy people, you can’t pick a fraudster from looking at them. An external audit will review the business records and processes without the conflict of personal relationships, which is hard to overcome in family owned businesses.
4. Tendering for work– if your business is in an industry where tendering for work is commonplace, such as the construction industry, often having audited financial statements as part of the tender process can give you a head start on other businesses that don’t present audited accounts.
5. Bank requirements– financing can often be a major hurdle for businesses throughout their business life. Presentation of audited accounts to the bank when organising finance can often carry more weight to your application as it provides some extra certainty to the bank about your financial position and the processes implemented in your business.
6. Process Improvement– even if nothing unusual is found as part of the external audit process, having an external audit can help to find areas in your business where your internal controls can be improved or where certain processes can be automated or streamlined.
An external audit can give you that peace of mind that your business is on track in relation to the financial and administrative processes.
Speak to one of the advisers from your local office and see how an external audit can help your business.