Auditing is the practice of examining a company’s (or individual’s) financial records to verify their accuracy and compliance with official rules, regulations and legislation. There are two kinds of auditing: an external audit or an internal one. The former involves an independent auditor providing their own evaluation of the company’s financial records, while the latter is when a company hires an employee with the remit of examining and improving their internal processes. Internal auditing is a voluntary process which cannot be used as a substitute for an external audit, which is often a legal requirement.
Who needs an audit?
All public listed companies are required by law to subject themselves to an annual external audit. Generally speaking, auditing is more commonplace among larger companies which have a greater workforce, customer base and transaction list to keep track of and a reduced capability to do so.
However, audits can be beneficial for companies of all sizes and stripes, from fledgling start-ups to charity organisations. In that sense, it makes good financial and practical sense for all companies to get audited.
Benefits of having an audit
There are several advantages of inviting an external auditor to review your company’s accounts. Not only can they spot any errors and make sure all financial records are being kept in accordance with official regulations, they can also identify weaknesses in current IT systems and controls and members of staff. This kind of insight can help to rectify those failings, as well as determining whether the company has enough qualified staff in the right roles and whether it is properly managing internal controls. What’s more, an external audit can help with analysing past trends to offer predictions for how the business may be perform going forwards.
An external audit can also be useful in keeping business owners in the loop, especially if they have taken something of a backseat with regard to the day-to-day running of the accounts. They also lend credibility to the shareholders that the official figures are a true reflection of the company’s performance and can also work to attract future investors. This can be especially useful for start-ups or solo entrepreneurs who are looking to prove that their operations are prosperous and represent a sound investment to prospective interested parties. It can demonstrate that they have made shrewd business decisions, are attracting a strong customer base and spending proceeds wisely.
This legitimacy that an audit lends is valuable to any organisation, even those not normally associated with profitability or pure business dynamics. For example, charities which can demonstrate positive audits are better placed to prove that they are responsible and trustworthy when applying for future grants.
Professional auditing services from Profile
Any external company which offers auditing services is regulated and must be approved by the Financial Reporting Council (FRC). If you’re looking for an approved auditing company which offers a professional service to the highest standards but at an affordable price, Profile are the ideal option for you.
With 16 years of accountancy experience under our belts, we can tighten up the financial side of things whilst simultaneously offering insightful advice on best practices and suggested courses of action for your business. To learn more about how our services can benefit your company, get in touch with us via phone (020 8432 2289) or email ([email protected]) and we’ll be happy to help.