If you’ve never come across a business audit before, but have been told that you should do one, don’t panic! Hysons is here to help. We have put together a breakdown of what audits are, the different types, and why they are important.
Business audits explained
In a nutshell, a business audit is an evaluation of a company’s financial statements, and it is conducted to ensure that your accounts are accurate and compliant with the legislation or regulatory requirements that apply to your business.
As part of the process, the auditor will provide formal documentation, reporting any issues in the business, allowing you to address the problems and make any necessary improvements to your operations.
What different types of audits are there?
There are two key types of audits that businesses undertake: internal audits, carried out by a company employee, and external audits, completed by a third party, such as independent accounting firms. External audits are generally viewed as more reliable since the auditor is outside of the company, but internal audits are useful for monitoring other business processes as well as your accounts.
In addition to this, there is a chance that your business may be subjected to tax audits or HMRC investigations. These usually occur if you submit incorrect figures on your tax return or frequently file tax returns late, and they can cause a lot of stress for business owners. However, if you complete your tax returns with the assistance of a chartered accountant, this is something that you should not need to worry about.
Why are business audits important?
Statutory business audits are essential to ensure compliance with legal requirements. Whilst many small businesses are exempt from audits, charities must comply with a specific set of guidelines for the Not-for-Profit sector. If you are unsure whether your company is exempt or not, it is worth checking with a qualified accountant because you may face hefty fines if you fail to comply!
Even if you do not have a legal obligation to complete a business audit, you might still need to do one. For example, your shareholders rely on the accuracy of financial statements, so they may require you to complete an audit to ensure everything is up to standard.
Moreover, annual audits are important for identifying any issues in your company’s financial management. If you neglect to take care of your accounts, errors could be left unnoticed, potentially leading to HMRC investigations and fines.
How can Hysons help?
As part of our business accounting services, Hysons can complete audits for small, medium and large businesses. While you focus on running your business, our team of qualified chartered accountants will look for ways to improve your finances, using our in-depth knowledge and understanding of the ever-evolving financial legislation to provide a comprehensive audit.
Hysons can assist with other aspects of business compliance besides audits, including management accounts, tax returns and grant claims. Take a look at our business accounting services or contact us to find out more.