When we hear about external audits, usually what comes in mind are colossal banks, investment agencies and multinational companies. However, things have changed. Such corporations are by no means the only ones that nowadays require the services of external auditors.
In an unprecedented scale, medium sized or even family – based businesses as well as non –profit organizations have perceived the advantages of requesting the aid of an external auditor that will examine their financial statements, check their books, verify their financial status and suggest certain ways in his audit report for improving their internal financial controls.
That does not necessarily mean that your accounting team or your esteemed and long-trusted accountant has disappointed you in any way. You may be entirely content with their work and their internal auditing. Still, you, as a member of your company and because of the personal relationship you have with them, it may be quite difficult, if not impossible, to evaluate their competence or objectivity without being assisted by adequately skilled and reliable external auditors.
Being aided by an expert external auditor that will work by your side can help you avoid deficiencies and errors that could have immense implications for your firm. Defrauding, contraventions or violations of obscure directives or government regulations may lie deeply concealed into your everyday accounting procedures and practices, which will surely bulge as your firm company develops and earns a greater share in the market.
So, consider the following 4 different reasons that will motivate you to consider more carefully the possibility of collaborating with an external auditor:
1. Conformity with governmental regulation.
External auditors are trained to recognize certain aspects of your accounting practices and bookkeeping that were never or are no more fully harmonized with new Internal Revenue Service directives or regulations. The auditor will also tell which is the most efficient and safe way to fix such compliance issues. Given that there is no cause for the external auditor to tell you anything but the truth regarding your financial condition and the level of your compliance with the law in his audit report, you can surely trust his observations and suggestions and follow his advice.
Both inside and outside your firm, your company’s financial statements and status will undoubtedly be considered more reliable and trustworthy if their audit services were performed by an independent, external auditor. Especially when it comes to a family business, a small sized corporation or a non-profit organization, such external audits lay down the foundation upon which stakeholders, possible lenders and investors can accurately evaluate your firm’s financial status. As for firms that are publicly traded, external auditing services provide an impartial glance at the firm’s accounting procedures and practices.
3. Fraud deterrent.
Of course, coming to know or even suspecting that someone is swindling your firm’s money is an unpleasant thought. But what would be even more unpleasant is to find out when the damage is beyond repair. Or, in case everything is properly conducted, why torment yourself and your board with insubstantial suspicions?
Surely, it is naive to believe that we can detect a fraud just by taking a look, and, unfortunately, swindlers are often persons beyond suspicion. On the other hand, an external auditor will review your books and statements without being troubled by personal relationships that could color their conclusions. For their part, being truthful about their findings is a matter of professional survival, and for you a means to protect your business from vile intentions.
4. Process improvements.
Most probably, the external auditor won’t find something suspicious. Still, even in that case, his experienced eye will spot areas that need improvement or stricter control and provide helpful information on how several processing procedures can be automated and facilitate future internal auditing.
Whereas such suggestions do not always have to be adopted straight away, it is more than great to know exactly which aspects of your internal controls are problematic and need to be improved. Such awareness will give your team the opportunity to lay down a plan to fix such problems or possible predicaments before they cause greater concern.
Lastly, make sure you explore your options in different countries when it comes to external auditing as you might be missing great opportunities. There are countries offering lucrative benefits, such as Cyprus. Find out more about auditing in Cyprus.
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