An audit can provide numerous benefits to your business such as detecting fraud, planning and decision making. This is a guide about why you should audit your Small to Medium Enterprise.
What is auditing?
An audit helps to analyse your business financial records to improve accuracy. When auditing for small businesses, your businesses financial statements and accounting will be reviewed. Most audits happen annually. Once the audit is completed, you will receive an audit report. The report will include things like what went well and what needs improvement.
Types of audits
There are two types of audits that can be done which is internal and external audits.
Internal audits that are is carried by someone within the company, can reduce financial mistakes. Not only do they help with finances but also they help to analyse everything within the business is working sufficiently.
External audits are completed by a third party and they must comply with the auditing standards which is auditing standards. They may want to have a look at the business financial records to have a clear view of how the business is doing.
Benefits of audits
Audits can help to identify issues and any financial problems within the business. This can help with the company’s decision making. Audits would help the company track and boost the business bottom line. Below is a few examples of why you should audit your SME.
This is the main benefit of having audits for small businesses. Fraud can happen in many ways such as payroll fraud, worker compensation fraud and theft. If you want to protect your enterprise against fraud and prevent fraudulent practices, you should have audits. Therefore if the employees know that there are audits they won’t be committing fraud.
Better decision making
Audits ensure that financial statements are up to date and accurate which helps better decision making for the future. Also, it is easier to budget for future business events.
Grow the business
Did you know audit can prevent the business from failing? As a result, it can prepare the business to grow by knowing the opportunities and take risks. Having an audit can attract interest from external stakeholders and investors. Buyers would be more confident to buy from you when you have an audited account if you plan to sell in future.
Improve tax compliance and planning
An audit would help you be ready for tax season. It is essential that all businesses have tax compliance and this includes filing taxes annually. A small business audit can also help you identify and maximize company profitability. Taxes would be less stressful if you had records and planning.