External audits are more than just adhering to compliance obligations

Audits are of value for areas other than just statutory obligations!

Audits are perceived by entities, particularly non-listed entities as a compliance cost with government regulators to ensure the financial reports adhere to applicable Australian Accounting Standards. An audit proves to be of value for areas other than statutory obligations and can really enhance the entity’s performance through procedure opportunities, credibility, fraud detection and prevention.

An external audit can provide valuable insight into an entity’s operations and identify opportunities to improve business performance. For smaller companies an audit can promote good business practices and create good governance, particularly if the company is looking to expand.

Below are four reasons why an audit is valuable for reasons other than statutory obligations:

  1. Enhance governance processes – increases good-decision making from management promoting business growth within the regulatory framework, which creates transparency for stakeholders from management, board members, shareholders etc. An audit can assist in identifying areas of opportunity in compliances, which in turn improves corporate governance.
  2. Internal controls and fraud detection – an audit involves reviewing internal controls in an entity and determining whether there are adequate processes in place and segregation of duties for functions such as payments, receipts and payroll. The team can identify opportunities and reduce the risk of misreporting financial information.
  3. Creates business opportunities and credibility – Lenders, investors and potential clients often require audited financial statements to assist in the decision-making process of working with the company. If audited, this may increase your ability to obtain finance, increase options between institutions willing to lend and may influence the interest rate. Adding credibility to your business will assist in achieving your business goals.
  4. Business growth – an audit can create value to your entity through exposure and knowledge in a particular industry or type of entity. As experts in not for profits and schools, we can assist with ways to improve deficiencies identified through experience in other audits of a similar nature. With our expertise, we can resolve common issues and improve business processes.

The resources available to auditors to assist with adding valuing to the audit include the use of technology to analyse reports directly from your accounting system such as an employee master file or supplier master file to detect any anomalies.

Our audit team can assist with adding value to your business through our exposure of various types of entities, specialising in not for profits and schools, provide advice on the internal controls and processes, and assist with complex compliance requirements and in adoption of new accounting standards.

Should you have any further queries or need some assistance with an external audit, please don’t hesitate to contact one of our Audit Specialists, complete your details below and we’ll be in touch or give us a call on 03 9835 8200.

About the Author
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Emma Freund , Melbourne
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