Why does the company need to be audited?
Auditing is important as it ensures the business’s financial records are accurate and in accordance with applicable rules (including accepted accounting standards), regulations, and laws. It is a process performed by the auditors to analyze the correctness of the business’s financial records.
A company can have auditors as an employee, which is called an internal auditor. But Law demands that companies have to verify their financial statements from external auditor to ensure all the statements are in accordance with the law, public companies have to verify their financial statements from an external auditor. An internal auditor is responsible to examine the internal records and help to improve internal processes such as operations, internal controls, risk management, and governance.
Auditing is very important and investing in the Auditing service is always fruitful for the business. Experience of Auditor matters as well because with his/her innovative auditing services, he/she can help you in finding the important account issues quickly which directly helps you in finding the weak point.
Benefits of audit
- It safeguards the financial interest of persons not associated with the entity’s management, whether partners or shareholders, bankers, FI’s, public at large, etc.
- Audited statements of account help settle trade disputes for bonus or higher wages and claims regarding damage suffered by the property, by fire or some other calamity.
- These are also helpful in settling liability for taxes, negotiating loans, and determining the purchase consideration for a business.
Audited statements of account are helpful in the settlement of funds at the time of admission or death of partners. - Government authorities may require an audited and certified statement before it gives assistance or issues a license for a particular trade.
When is an Audit required?
An audit is a statutory requirement if two of the following apply:
- the company has an annual turnover of more than £10.2m
- the company has assets of more than £5.1m
- The company has more than 50 employees on average
However some companies must have an audit and these include:
- A public company
- An authorised insurance company
- A company involved in banking
- A company whose shares are traded in a European state