You’re risking your business’ operational efficiency if you don’t invest in proper and regular audits. You’re also risking it by failing to comply with various legislative and industry standards.

If you’re a business owner, feeling apprehensive about having your first business audit is normal. However, this process can do your enterprise more good. When done correctly, you can prevent financial issues that might bring your business under.

What Are The Different Types Of Tax Audits?

Tax audits can be government, internal, or external audits. In Canada, the Canada Revenue Agency (CRA) takes care of government audits. This agency ensures that tax laws apply to everyone. You don’t have to be anxious if you’re audited by the CRA. Know that they’re just helping you meet your obligations.

An internal audit assesses the company’s internal controls. These aspects include its accounting processes and corporate governance. This audit type ensures that your company complies with specific laws. It also helps keep your data collection and financial reporting timely. The company usually hires internal auditors who belong to and act on behalf of the management team to perform this type of audit.

Management requests for internal audits. On the other hand, external audits are for the benefit of business shareholders. Independent audits are processes performed by external parties. Generally, these external auditors examine your financial records, commercial transactions, financial statements, internal controls, and accounting practices.

To be independent, external auditors or certified accountants must perform the audit. They are also responsible for upholding audit reliability. Apart from that, they must also avoid instances leading to conflict of interest.

When Do You Need To Conduct A Business Audit?

Various circumstances can prompt a company to launch an audit. Here are some of them.

Applying For A Grant Or Looking For Investors

When a business entity or charity applies for a governmental grant, it might be asked to undergo an external audit. Such an audit aims to validate company statements and warrant the impartiality and honesty of the accounting figures.

The audit can also boost your business investment proposal’s trust, reliability, and credibility. The audit results can also help get salient investors on board your new venture.

Securing A Loan To Expand The Business

Lenders often need to request an external audit for companies looking for a loan. This audit aims to safeguard the lender’s possible investment in your business. They need to confirm whether the figures in your financial statements are correct and honest.

Selling Your Business

Many business owners intend to sell their companies for a financial profit. You should prepare for an external audit if you’re one of them. This process can help you boost the credibility and reliability of your company. These audits can confirm the credibility and truthfulness of your financial statements too.

Be Audit-Ready and Help Your Business Achieve More Success

Audits are not just checks and balances to catch unethical practices. These processes are in place to ensure that the business operates within the purview of the law.

Also, these audits can help business owners prove their credibility to management, lenders, shareholders, and external and internal stakeholders. If you need funding from lenders or customer patronage, you can get the help you need quickly and seamlessly.