Assessing Whether Audit and Assurance Is Worth It For Your Company
Many companies think that assessing whether audit and assurance are worthwhile for their company is a fairly straightforward process. But it’s not. You need to make sure that you have covered all of the issues that might affect your business in a comprehensive manner. These types of assessments will help you make the right decisions on how to manage risks and ensure that your company remains profitable.
A basic question to ask an auditor is what exactly they are going to review. The auditor needs to look at three different areas of your company: financial statements, control statements, and internal controls. An accountant can’t review the financial statements or control statements, because those items would involve control functions that the accountant doesn’t have authority to manage. They also cannot review the internal controls because those functions are always performed by an individual within the company. So an accountant can’t give you a true picture of how well your internal controls are performing.
Assessing whether audit and assurance are worth it for your company starts with evaluating the importance of assurance for your company. Why is assurance so important? Well, when you issue an audit policy, it’s a way of telling your audit team that your company has high standards for ensuring the protection of your assets. Audits are a way for your team to highlight any areas where your company isn’t meeting the obligations that it makes to others. Even the best audit team can only perform within certain constraints, and if your company is consistently missing due dates, missing documents, or other red flags, you may need to think about whether you really need the extra assurance.
Another question to ask yourself before assessing whether audit and assurance are worth it for your company is what value can you get from it? You definitely want your assurances to stand up in a court of law, but you also want them to have a significant effect on your bottom line. The more assurance you provide, the more likely companies will take your audited financial statements seriously, which means they’ll pass on some savings to you. But does that lower your bottom line enough? Most experts say that not lowering it enough to be effective is a bad tradeoff.
You may also want to ask yourself whether your company’s financial statements currently show all the accounting records you need. Some companies have internal control systems already, so all that you need to do is to obtain assurance that all the relevant records are in place. Other companies, however, don’t have internal control systems, so it might be necessary to train your own internal auditors to look over those records that you’ve requested. With the additional work, you might find that you’re spending more time than you need to on these audits.
Assessments can provide some insight into how stable the company is. When you’re assessing whether audit and assurance are worth it for your company, it’s important to check its credit score, for one thing. Many companies with less-than-perfect credit ratings might find themselves in jeopardy of being investigated for bankruptcy if they can’t demonstrate a strong sense of financial responsibility.
Now that you know what to expect from a review of your company’s accounts, it’s time to ask yourself whether that assessment is fair. This is one of the most important questions you’ll face in your assessment. Do you think your company has what it takes to successfully pass an assessment? If you don’t, you should strongly consider reassessing your assurance. That said, though, you should be careful to avoid a situation where you’re too eager to get rid of your audit and assurance. That could lead to complications down the road, especially if your company hasn’t improved significantly since you first conducted the review.
When you finally decide that your company will make a good candidate for auditing, you’ll need to ask yourself how you plan to pay for it. This will be an essential part of your decision-making process, so you should definitely take the time to do it right. Most importantly, though, you must have a plan for how the money will be spent. This includes how you will fund the company if you decide it needs an injection of new funds. You might have to sell a portion of your company to raise the needed capital, or you might have to seek debt financing on your own. A qualified accountant can help you determine which method would work best for your situation, so it’s worth talking to him or her as well.