Recent changes to how mandatory auditing is conducted may have caused you to breathe a sigh of relief.
Where once companies with a £10.2 million turnover and/or assets worth more than £5.1 million were required an audit, now only companies with a turnover of £15 million and/or assets worth more than £7.5 million will require an audit.
If your company now falls below that threshold, it might be tempting to forget about auditing your company and just focus on your business without interruption.
While auditing might seem like a time-consuming process that brings additional complexity to your financial reporting, it can deliver a range of benefits beyond compliance.
The evidence for auditing
Research indicates that there are hidden benefits to auditing that you may be missing out on by forgoing the process.
Academics Ann Vanstraelen and Caren Schelleman have considered audits from a global perspective considering the impacts they had on business in the UK, USA, and South Korea.
Across international markets, Vanstraelen and Schellerman observed the same positive impacts.
Audited companies were found to pay lower interest rates on debt as the watchful eye of auditors ensured that businesses were getting a fairer deal.
The legitimacy provided by the audit can also open the doors to future financial ventures.
Compared to non-audited companies, audited companies have higher credit ratings and better access to credit ensuring that they can secure vital funds needed to stay competitive.
Alongside these avenues for growth, the most expected positive impact found in the research is the reduced risk of fraud.
By design, audits are imposed to ensure the legitimacy of transactions and opting into audits can protect against accidental misfiling as much as the work of bad actors.
What it means for you
On the whole, research indicates that auditing is the most effective way to ensure your finances are polished and precise.
Although auditing can be somewhat time consuming, the time your immaculate financial records will save in lengthy negotiations with banks and investors will make up for the mild inconvenience.
Most importantly, auditing will ensure that there are no hidden surprises waiting for you in the form of excessive interest payments of fraudulent expenses.
Want to find out how a voluntary audit can help your business? Get in touch with our team for tailored support and guidance.
