Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Investing

Can Investors Trust Management? A Business Case for Doing an Audit

Published : , on

 

Conducting a regular business audit is a vital document that is needed to help monitor and inspect the financial situation of a company. To prevent losing track of assets and overheads a business has, audits help bring clarity to managers where their cash in-flows and out-flows are going to and from.

Audits can take many different forms and depending on the nature of your business, one may be deemed more important than the other. Take for example, a retail audit. For those operating in industries where financial success is based off selling tangible products to customers, this audit measures sales volumes of products being sold. As for service-based businesses, measuring financial success is most likely due to the quality of service employees are providing to customers, thus a quality control audit would be most appropriate.

Other than clarifying a businesses financial situation, a thorough audit when presented to potential investors can help offer the reassurance they need before making an investment decision.

In relation to this, the main benefits of supplying investors with an audit include:

  • The credibility given to financial statements — the main purpose of an audit is to verify that the financial statements made in a business’s documents are correct and accurate, thus helping to build trust with an investor.
  • Improves planning, budgeting, and forecasting — since financial audits give an insight to the assets, liabilities, and cash inflows and outflows that are present, this information can be used to plan ahead and ultimately limit the potential financial risks a business might face. From an investor’s perspective, this shows professionality and key organisational skills.
  • Compliance — for business owners, shareholders, and potential investors, showing conformity to statutory requirements is the ultimate way to show investors that a company is in fact who they say they are.

As any investor or entrepreneurs knows, how transparent a business is when asked to see key information including their statement of income, cashflow statements, and a balance sheet is the ultimate determinant as to whether they go through with their investment. Highlighting the importance of this is xxx from Wisteria Accountants, stating “xxxxxxx”.

The importance of investors for emerging businesses

For businesses that are new entrants into the market, having easy access to capital is crucial for its survival. Therefore, the monetary support offered by investors is something highly valuable.

While immature businesses might not have had the chance so far to build up a high level of trust with external shareholders, going beyond the lengths necessary to start building this is vital. There a numerous ways audits can help with this. Since new entrant businesses are most likely still in the processes of development, providing interested investors with an operational audit is advised. This helps outline a business’s goals, targets, procedures, and current outcomes of a project. By providing investors with this information ultimately shows transparency, painting businesses in a positive light from the get-go.

The effect technology has had on business audits

As technological developments take their toll on all industries, the dynamic nature of markets intensifies. Being the catalyst behind most business innovations, constant technological improvement and the monitoring of product and service performance is more important than ever to avoid the ‘outdated’ label becoming attached.

As technology continually redefines how sectors operate, developing strategies and creating innovative ways to prevent falling behind in the market is something that investors commonly look for. By providing them with an aforementioned operational audit, it shows a business’s initiative to set goals and targets to deal with market changes and advancements that have yet to come.

Regardless of the type of audit examination that is undergone, the likes of statutory audits are put in place to examine the accuracy and legitimacy of the financial statements put forward by companies operating in all industries. These provide potential investors with the accurate knowledge needed before taking the leap towards investment.

Sources

https://marketbusinessnews.com/financial-glossary/audit-definition-meaning/

https://www.uhyhn.co.nz/2019/01/29/top-5-benefits-an-audit-provides/

https://www.bdo.global/en-gb/blogs/tech-media-watch-blog/october-1/how-audits-can-retain-investors%E2%80%99-trust-in-times-defined-by-disruptive-tech

https://www.accountingtools.com/articles/types-of-audits.html

 

 

 

 

 

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post