What value can an audit add to your business?
When the phrase ‘the auditors are coming in’ is heard by some business owners, alarm bells can start to ring. But the reality of the modern audit process is that it should be a valuable and beneficial part of your company’s financial compliance. As a regular health check on your finances, controls and processes, an audit is far more than just a legal requirement.
Sara Kani explains why your business needs an audit and highlights how the process can increase confidence in your financials and bring assurance to lenders, investors and buyers.
What happens when my business is audited?
In basic terms, an audit is an annual review of your company’s financials. The audit is carried out by an independent expert team – who can be relied on to be objective. An auditors job is to check your numbers and processes to give you comfort that you are managing your finances in the right way.
When our team arrives for an audit, principally we're there to look at the finances. But, in reality, we become part of your business for that week. We get to see the ‘real business’ from the inside and that can provide valuable insight.
One way to imagine the audit is to think of it as a health check for your business and your finances. We’re checking your vital signs to make sure you’re healthy, that there are no hidden conditions and that you and the business are prepared for the road that lies ahead. In that sense, the audit becomes more than just a compliance check. It’s a chance to get fitter and stronger!
Does my company have to be audited?
Not all private limited companies are required to have their financial statements audited. There are exemptions for smaller businesses. Your company may qualify for an audit exemption if it has at least two of the following:
- An annual turnover of no more than £10.2 million
- Assets worth no more than £5.1 million
- 50 or fewer employees on average.
Further detail on audit exemptions and requirements can be found here.
What’s the true value of having ‘comfort’ from your audit?
What an effective audit does is give you ‘comfort’ in your finances. Having a set of ‘audited financial statements’ is about providing you and your financial stakeholders with tangible assurance that your accounts are presenting a true and fair financial position of the company.
Having this high level of comfort is important for many reasons:
- Helps you make good decisions as a business – bad decisions can be made if your financials aren’t accurate. Knowing that your figures are correct gives you better foundations for all your decision-making, both in the short-term and longer-term.
- Informs your budgeting and makes it more accurate – if you’re basing your budgets on incorrect information, that can come back to bite you as the year progresses. Budgets that are based on solid financials are more realistic, and the targets you set are more likely to be met.
- Assists in raising external finance – An audit provides independent verification that the financial statements of your business are true and fairly represented. This provides credibility and confidence to your stakeholders, especially suppliers and lenders, and increases the chances of raising finance.
- Gives independent oversight over the business and company culture – as the audit takes place, you have access to an experienced and objective finance professional. You can talk to us about your future plans, ideas or concerns, and get an external insight into the current opportunities and pressures on the business.
Our team also get to spend time with your staff, so we get a handle on the culture of your business. If your people are under pressure, or are being made to do things they don’t agree with, that would be spotted and reported back to you. The audit is a great way to take an independent snapshot of the way your people work and their values in the workplace.
- Provides an opportunity to identify tax-planning opportunities – during the audit, it may be that we spot opportunities for tax planning, to save your business money. You may not have applied for R&D tax relief for eligible research and development work. Or you may not have applied for the super deduction capital allowance, another relief in relation to capital expenditure that could save you money on your corporation tax bill.
- May reveal signs of fraudulent activity – any kind of fraud or misuse of the company’s money is a big concern and something you need to be on top of. We check for fraudulent behavior and review the controls you have in place to protect the business from fraudulent activity. We will make recommendations for improving these controls and tightening procedures. If we do find any concerns or issues during the audit, we come straight to you first. We’ll discuss any problems and then offer ways to help you resolve them.
How can we add value through the audit process?
At Haines Watts Slough, we work closely with SMEs and owner-managed businesses, so our passion is to partner with you, add our expertise and help your business grow. Where we find an issue, whatever the problem is, we can help you resolve it.
We pride ourselves on providing efficient and effective audit services, not to disrupt your business, but to work with you and your team to get the best out of your company’s financials.
We are approachable, flexible and responsive, and that makes our audits a far more pleasant experience for our clients.
Talk to us about your audit
Having that audit ‘health check’ makes sense at any time, but it’s especially important as we recover from the pandemic and face the opportunities and challenges of 2022.
Get in touch with our experts to find out how an audit will add significant value to your financial management and future growth plans.