When you own a car, you know that it is pertinent to have it serviced at least annually to make sure it’s running smoothly. When you own a business, you may not think it but it also needs a service. An audit service for your company is very similar to that of a car service. It is not only recommended, but it’s very important for daily maintenance and overall stability.
If you are passionate about your car, you will find the necessity to take care of it. Similarly, if you are passionate about your company, you will ensure that an audit is scheduled to avoid any unexpected speed bumps. Have you ever been driving in the city and your engine light flashes and you have nowhere to pull over and no immediate help around you? This is how accidents can happen and how damage can be caused to your car, sometimes damage that may even be irreversible.
Don’t let that happen to your business! You need to schedule regular checks by an independent body. Someone who is not involved in the everyday operations, who has an expert opinion can view the business from a different perspective. Financial issues, to an independent advisor, can be quite common and easily identifiable. But these issues can go unnoticed by the business owner or someone involved in the business. With their extended experience and knowledge with auditing businesses, there really is no better independent advisor than an auditor.
Most business owners perceive an audit as unnecessary as extracting a perfectly good tooth. This perception has been built on decades of stigmatisation of auditors as interrogators rather than advisors. While auditors need to remain independent as prescribed by the Auditing and Ethical Standards, they are not restricted to provide insightful advice on process improvement. Advice which can improve processes which may be cumbersome, old-fashioned, risky, ineffective or unnecessary.
Areas of advice for a statutory external audit include:
- Cashflow management
- Assessment of debt collection and debtor days
- Identification of excessive interest rates on debts and assistance with refinancing and inadequate interest rates earned on deposits
- Recognition of potential risks of misappropriation of funds due to weak internal controls
- Business succession and risks of inadequate plans in place
- Short creditor payment cycles which cause constraints on the cash flow
- Compliance with recently introduced laws and regulations
- Insight into best practice from experience with other businesses within the industry
Auditors can bring a sense of security to your business with greater awareness of your finances that can lead to more accountable and efficient staff within a healthy working environment.