Financial statements audited
For many small business owners, the word “audit” brings to mind a stressful tax season. But when it comes to your company’s finances, you have a choice. You can choose to have your financial statements audited by a certified public accountant (CPA). An audit is an official review of your financial statements, such as the balance sheet, profit and loss account, the cash flow statement reports, and income statement, by an outside, independent CPA firm.
Financial statement audits are an essential part of the process for any business. The audit is a process that ensures that the financial statements are expressed in an accurate and consistent manner. The auditor’s role is to express an opinion on whether the company’s financial statements present fairly and truthfully. They also provide a number of benefits for the company being audited. Here are some of the most important benefits to consider:
It leads to improved management decisions.
The main benefit of getting financial statements audited is that this process leads to improved management decisions. An audit will help to present useful information and recommendations that will help with management decision-making. This information is not available in typical financial statements, but it can be valuable in helping to make better decisions.
The audit report can identify potential risks and frauds in a company’s financial records, which management can then address with policies and procedures to mitigate the problems. In addition, auditors can provide valuable feedback to management about the company’s processes for managing financial statements.
You can become more profitable and efficient.
In addition to improving management decisions, audits also lead to better profitability and efficiency in the future. These improvements come as a result of taking action based on the information you receive through an audit report.
It’s good for your reputation.
Having your financial statements audited can improve your reputation, especially if your company is publicly traded. Investors want to know that their money is going somewhere safe, and a financial statement audit helps them to see that they are investing in a reliable company with sound financial practices.
Consistency of Presentation
The auditor is independent of the organization and its management. This independence allows the auditor to look objectively at the consistency of the presentation of the financial statements. If the financial statements are inconsistent in their presentation, it can lead to inaccuracies in management’s decision-making process.
When a company has its financial statements audited, it provides enhanced credibility for those who might use those financial statements. Financial statement users include owners, bankers, suppliers, and customers. Outside investors might also rely on a company’s audited financial statements before investing in the company’s stock or bonds.
When a company gets its financial statements audited, it allows for more comparability between different companies. When two companies use similar accounting principles, this allows for easier comparisons by financial statement users. Those users rely on the information contained in a company’s financial statements to make investment decisions, credit decisions, and other important business decisions.