Every company needs an accountant who is tasked with managing all financial matters. While undertaking their role, an accountant is required to embrace integrity. However, it is essential to countercheck their work to ensure that everything is in order. As such, below are various reasons why it is vital for the financial records which have been prepared by your accountant to be audited.
To safeguard your finances
Regardless of the size of your company, there will be money being received and sent from different parties. Your accountant must maintain proper records relating to all financial transactions. The audit will, therefore, ensure that all the finances are in order and all funds have been allocated for their intended purpose.
To ensure they remit all statutory payments
Various payments have to be made by every company on a monthly basis. Some of these include tax and retirement contributions for all the employees. Since everyone is usually busy within the company, you might fail to follow up to determine whether all these payments have been remitted to the appropriate authorities. Auditing of the financial records will, therefore, enable you to determine whether such payments were made and the amounts forwarded.
As long as a company is publicly listed, it is compulsory that your financial records are audited by external auditors annually. This helps to safeguard the investment that has been made by the shareholders. As such, when shareholders are looking for possible investments, one of the factors that they will consider is whether the company has fulfilled its legal requirements by being audited. Additionally, being audited ensures that your business follows all the legal guidelines and can carry out its operations smoothly without any interferences by the authorities.
It improves the reputation of your business
Different stakeholders are more likely to engage in business with companies that are regularly audited compared to those that are not audited. An example of such stakeholders include suppliers who will often forward goods to the company on credit. The presence of such audits acts as a guarantee that the finances of the firm are in order and all future payments will be made without any problems. This is because such audits show that there are checks in place to safeguard their business interests. It also ensures that any errors that might arise can be detected early and measures are taken to prevent such mistakes from happening again. Regular audits will, therefore, give your company a higher reputation in the business environment compared to another that hardly undertakes similar audits.