When was your last financial audit? Why are audits important to your business? Our experienced accountants at Malloy, Montague, Karnowski, Radosevich & Co., P.A. provide a full range of audit services to help your business succeed.
What are financial audits and why are they important?
Audits come in several forms, and they include: tax audits, operational audits, compliance audits and financial audits. “Financial audits” are independent, objective evaluations of a company’s financial reports and financial reporting processes to ensure accuracy. Audits are labor-intensive. Auditors examine source documents, obtain third-party confirmations, conduct physical inspections and test internal controls, among other things.
Financial audits are important to a company’s success for several reasons. First, many third parties require them, including: new lenders/existing lenders who may condition making a loan in the first place or for otherwise maintaining an existing loan on audited financials - or who may otherwise provide more favorable interest rates in cases of audited financials or vis versa; certain types of customers, including governmental agencies, may require audited financials as a non-negotiable condition to doing business with a vendor; and prospective investors/acquirers who may walk without audited financials or who may otherwise sweeten the price with audited financials or vis versa. Second, the company’s 401(k) plan and other benefit/retirement plans may require them. Third, the company’s internal documents, including buy-sell agreements and other succession documents, often use them to calculate stock values. Last, but not least, audits help guard against fraud, embezzlement and other misappropriation which are often difficult to detect internally. During an audit, accountants often identify fraud risks and can recommend preventative measures – and other times, an audit uncovers an existing fraud.
If you’re a business owner, there are probably several reasons why you would benefit from a professionally prepared audit. Call one of our seasoned professionals at MMKR to discuss your audit needs.
Sources:
“An Expert Explains the Ins and Outs of Outside Audits,” Entrepreneur (June 2016).
“Looking To Borrow? You May Need An Audit, Review Or Compilation,” Forbes. (Nov 26, 2016).
