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An audit is essential as it provides reliability to a set of financial statements and gives the investors (shareholders) confidence that the accounts are accurate and fair. It may also help in improving a company’s internal controls and systems.
Companies have audits because the companies do not necessarily manage by their owners. Instead, the owners hire professionals to manage the firm. The management’s responsibility is to maximize the owner wealth in the company; for maintaining track of such wealth maximization, the company’s direction prepares financial statements for the owners. First, however, owners need someone to vet the financial ideas for accurate and fair presentation.
The auditors are auditing for the shareholders of the company. Whether the audit is mandatory or optional depends on the type of entity. For example, a sole proprietor or a partnership firm may not have it account audited in some jurisdiction while it is compulsory for the public companies.
Benefits of audit
What is the right time for your company to get an audit?
The main reason for the audit is to provide reasonable certainity that the financial statements are free from material misstatements and mistakes and to certain that all events that can adversely affect the company have been disclosed. Many companies contract the services of a public accounting firm to audit their financials. While audits can be expensive and time-consuming, they are sometimes a necessary undertaking for the business.
An audit is an chance for a CPA firm to give you a second belief on the accuracy of your financial statements. Auditors conduct work by evaluating assertions and if there is evidence to support a particular view.
Assess business efficiency
Rapid evolution may origin an owner to lose control of operations, and business productiveness may decline. An audit discloses areas of company incapability and helps the owner to make improvements. Auditors assess the income statement by evaluating changes in the expense and revenue balances over the years.
Reduce the risk of employee theft
The most significant risk for a rapidly growing company is employee theft, and an audit can help you identify areas of risk. Every audit requires a careful review of cash balance, including a recalculation of each month’s bank reconciliation for the past year.
Make the change
The demands of running your business can appear to immerse, and it may be challenging to decide which takes are most important. However, hiring a CPA firm to conduct an annual audit is a critically important step to manage growth and make informed business resolutions. Sure, an audit will require time and money, but the benefits of an audit for an audit outweigh the costs.
The information prepared and presented by companies, like the capital markets it supports, never concludes to develop. Auditors have been a part of this evolution. They will continue to play an expanding role as they apply their values, experience, and talent to emerging forms of company-prepared information.
At AJSH, we assist our clients in dealing with internal audits, government audits, various corporate matters (Company incorporation, statutory audits, ROC compliances, company winding-up) in India by providing them adequate support and guidance from our end. If you have any questions or wish to know more about the benefits why the company needs to be audited, kindly contact us.
