A financial statement audit is an independent examination of the inner financial records of a business. The auditor then compiles a report specific to the findings of the examination. Financial statement audits are useful tools for business owners who are seeking ways to increase their profits. Below are five advantages of having a financial statement audit performed by an objective expert.
Independent Audits Protect Against Errors and Theft
Most business owners don’t have time to go through their records with a fine-toothed comb—and even those who do frequently don’t know enough about accounting regulations to recognize red flags and other signs things may not be right. An independent audit can protect you from internal errors or intentional thefts that result in lost revenue. Keep in mind, the larger your business gets, the more room there is for employees to make mistakes or even engage in theft of company funds.
Independent Financial Audits Help Identify Problem Areas
An independent financial audit shows you exactly where your money is going, providing you with the opportunity to identify problems where you might be able to save money. It also gives you a very clear picture of the exact financial shape your business is in and can help predict patterns and trends that may have a serious impact on the overall financial health of your business.
Independent Financial Audits Provide Credibility to Potential Investors
If you’re considering seeking investors for the purpose of growing your business, being able to provide interested parties with a copy of an independent financial audit provides you with credibility. Some suppliers may request a copy of an independent auditor’s report prior to extending a line of credit. Also, while some independent investors may provide capital in the absence of an audit, banks and other lending institutions require them.
Independent Financial Audits Are Necessary for Your Business to Go Public
If you’re considering the benefits of taking your business public at some point in the future, you’ll be required to provide three years of independent financial audits at the time you make your application to go public.
Independent Financial Audits Provide Transparency
The time may come when your business is chosen for an audit by the Internal Revenue Service, which can be a nerve-wracking experience for any business owner. Having an independent financial audit report on hand goes a long way toward circumventing potential issues with the IRS.
Please feel free to contact us at your convenience to learn more about the benefits of having financial statement audits performed.