Following the rules and regulations of the state or the nation, on the whole, is very crucial for a business. Just as your business needs to India Financial follow meticulous management and thoughtful operation, maintaining your books of accounts is also very essential for any business. To check whether it is done properly and keeping with the set standards, an authentic and impartial regulatory authority is required. This is the government-controlled body that is responsible for conducting a statutory audit in India to check your business is as good and legal as it should be.
However, sadly and unfortunately, most business owners wonder whether their business really needs an India Financial audit. Well, internal audit is a compulsory operational feature for every business large or small, but the need for statutory audit will largely depend on the size and type of your company.
The following examples can best explain the situations when you will need and not need to have your business audited:
- If you own a micro company of five employees and is held closely having annual revenue of not more than $2 million, you will not need an audit provided you do not have any future plans of selling your business or your business does not have any debtor is not growing exponentially. You can save your hard earned profits and move on with your business.
- On the other hand, if you are an exponentially growing company and are backed by investors, then you will need an audit completed. Especially, if you have or plan to have some debt, then an India Financial audit is mandatory. Moreover, if you have plans to go public in the future, then you will need a statutory audit done by one of the top audit companies in India.
Therefore, having a financial audit done is entirely situational. If it is needed, it must be done to avoid legal hassles.
Features and characteristics of an audit
The elements and attributes of an audit are unique. An audit is not designed to eliminate business risks or catch any errors. It does not even provide any guarantees. However, having your company accounts audited will give you the desired peace of mind that your books of accounts are adequately maintained, and it represents the India Financial condition of your company precisely based on the set standards and regulations of the government.
Now you may wonder why that is important. This is because an audit will ensure that your financials are now of high quality. You will be able to use it as a useful tool and run your business correctly. Apart from that, you will also add value to your company with a completed audit.
In additions to that, an adequately audited book of accounts and India Financial statements will also provide a definite sense of quality to others as they will be able to relate the numbers that you are offering.
Therefore, an audit is recommended if you want to increase your business value. A properly completed audit will help you in identifying all those areas of value improvement.
Benefits of it
Nothing in business is done without a profit motive or to incur a loss. Every step you take whether it is in a business operation or management and administration, there is an underlying motive to generate a steady revenue, if not increase it. Therefore, when you have your business financial statements audited there must be some benefits as well. Some of the benefits of an official financial audit done by one of the best audit firms in India include:
- It enhances the quality of your financial statements.
- It provides a positive sense about your business to third parties such as investors and banks, private equity groups and insurance companies, valuation specialists and others.
- It will help a lot if you have a plan to go through an IPO ever.
- It will help your business from the valuation perspective.
- If ever you plan to sell your company then the buyers will consider yours to be a better company.
- It is a tool that provides peace of mind to the CEO or owner knowing that any errors, frauds or cash leaks will be quickly picked up through this process.
In short, an audit will let you know the status of your finance and internal controls with an added benefit from the auditor in the form of handsome suggestions and inputs on ways through which you can improve your system.
The cost factor
You will have to get your financial statements audited once every year as a part of your best business management practice, and therefore you may wonder about the most involved in it. Well, the cost of an audit will depend on many different things. Some of these factors that will influence the cost of an audit include the following:
- Size and types of your business
- Complexity in your business or its accounts
- Number of transactions made each year
- Number of legal entities
- International or national operation
- Public or private company
- No inventory or a lot of inventory at multiple locations
- Service or manufacturing and
- Single site or a multiple locations business.
Moreover, the cost of your audit will also depend on the firm that you call for your business audit. Large and reputed audit firms will charge you at a higher hourly rate than those that are small. Make sure that you choose a firm that has multiple resources, tools, highly trained staff, a license, and proper skill sets to complete an authentic audit.
Seema Mehra is a Chartered Accountant at Ashok Maheshwary & Associates, advisory firms in India that provide accounting services in India in a convenient manner. She is a professional writer and loves to share Financial related topics.