Accounting and auditing are some of the most crucial processes for business operations as they deal with financial activities and records of a company. These two functions deal with the overall finance activities and ensure that good financial management practices and risk mitigations strategies are employed to ensure business continuity and avoid business interruption.
Roy Avungana, Chief Operating Officer at Chapu Chartered Accountants explains that, “while accounting is a much broader field that includes everything from the organisation’s financial flow to the management of business finances, auditing is more of a specialised function. However, auditing remains an integral part of the accounting process as it involves examining financial records to ensure they are accurately documented in accordance with accounting principles helping to prevent discrepancies.”
“Even with a finance department or accounting firm handling their financial affairs, most businesses are not always sure when they must hire auditors. Nonetheless, there are advantages to appointing auditors as your company grows. It is crucial for companies to investigate and understand how this might assist their businesses in the long run,” says Avungana as he shares some of the advantages of procuring services of auditors:
- Financial transparency: auditors verify the accuracy of your financial records which gives your key stakeholders such as business partners, banks or potential investors the assurance about the accuracy of your financial records. Moreover, this can help improve your organisations reputation with your key stakeholders as it demonstrates willingness for transparency and accountability.
- Risk mitigation: auditing can also serve as a tool to identify risks and areas of improvement to ensure that business processes are not exposed to operational risks or inefficiencies. Auditors assess companies internal control processes and risk management procedures. By identifying these gaps and following the right processes, auditors can help you strengthen your internal controls, improve efficiency and apply best accounting practices.
- Quality assurance: procuring the services of auditors will give your key stakeholders the assurance that your financial records have been rigorously examined and found to be reliable by an independent person. Where there may have been findings, it further gives assurance that the findings will be addressed which will then result in better and more improved financial records for the company.
- Compliance: Auditors have in-depth regulatory knowledge and a great understanding of accounting principles as they interpret complex processes to ensure that your records are compliant with relevant accounting standards and regulatory requirements.
- Access to specialists: one of the key advantages of hiring an audit firm is the benefit of obtaining impartial and independent evaluation of your company’s financial records, internal processes, and operational procedures as auditors bring new thinking and perspective when analysing financial records. Their impartial assessment helps in identifying any mistakes, irregularities, or possible areas for improvement that might have been overlooked internally.
“Auditing provides an independent assessment of the company’s financial records and ensure that all the records are correct and accurate to avoid misrepresentation of the company’s financial position. Moreover, audited financials create assurance to key stakeholders about the company’s financial positions as internal assessments are sometimes prone to errors,” concludes Avungana.
