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2-Benefits of an External Audit

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Accounting and finance

88 Documents
Students shared 88 documents in this course
Academic year: 2024/2025
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okello dickson
Kyambogo University
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David Kamukama 2023 MAT ABACUS BUSINESS SCHOOL

Benefits of an External Audit

If your organisation requires an audit due to industry regulations or because potential investors or other stakeholders require one, it needn’t be a negative, stressful experience. Here we aim to highlight just a few major benefits that an audit provides.

1. Compliance

Obviously this is one of the main reasons to conduct an audit: to meet the statutory requirements and regulations in your industry. An audit provides complete peace of mind for business owners and shareholders that the organisation is 100% compliant with all of its current statutory obligations. Non-compliance runs the risk of incurring heavy fines, loss of customers and a tarnished reputation – damage that far outweighs the cost and any minimal, temporary inconvenience that may be caused by an audit.

2. Business Improvements / System Improvements

A thorough, in-depth audit takes an impartial look at your organisation’s internal systems and controls. This means it’s an ideal opportunity for the auditing experts to suggest improvements that can make your business more efficient. Ways to improve internal controls, business systems, accounting practises, efficiencies, governance and culture can all be identified through the audit process.

3. Credibility

An audit provides independent verification that the financial statements are a true and fair representation of the entity’s current situation. This provides invaluable credibility and confidence to your organisation’s customers/clients, stakeholders, investors or lenders and even potential buyers. It is confirmation that financially everything is as it appears to be.

4. Detect and Prevent Fraud

It’s estimated that up to 30% of New Zealand businesses are subject to fraud, error and corruption. Workplace fraud can occur for years without being detected and can be so substantial that some businesses never recover financially or repair their reputations. An audit can be an effective tool for identifying fraud and opportunities to commit fraud. Experienced auditors are skilled at pinpointing weaknesses in an organisation’s systems and controls and suggesting ways to strengthen these to prevent fraud occurring.

David Kamukama 2023 MAT ABACUS BUSINESS SCHOOL

5. Better Planning and Budgeting

An audit confirms the accuracy of an organisation’s financial statements by analysing its financial transactions. It’s a detailed process and can result in certain types of income, expenditure, assets and liabilities being scrutinised. This critical examination, coupled with the auditor’s financial expertise, can then be used by business owners for better financial planning, budgeting and financial decision-making for the future.  Sleeping Partner  Taxation  Due diligence  Capital Raising  Business Valuation

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2-Benefits of an External Audit

Course: Accounting and finance

88 Documents
Students shared 88 documents in this course

University: Kyambogo University

Was this document helpful?
David Kamukama 2023 MAT ABACUS BUSINESS SCHOOL
Benefits of an External Audit
If your organisation requires an audit due to industry regulations or because potential
investors or other stakeholders require one, it needn’t be a negative, stressful experience.
Here we aim to highlight just a few major benefits that an audit provides.
1. Compliance
Obviously this is one of the main reasons to conduct an audit: to meet the statutory
requirements and regulations in your industry. An audit provides complete peace of mind for
business owners and shareholders that the organisation is 100% compliant with all of its
current statutory obligations. Non-compliance runs the risk of incurring heavy fines, loss of
customers and a tarnished reputation – damage that far outweighs the cost and any minimal,
temporary inconvenience that may be caused by an audit.
2. Business Improvements / System Improvements
A thorough, in-depth audit takes an impartial look at your organisation’s internal systems and
controls. This means it’s an ideal opportunity for the auditing experts to suggest
improvements that can make your business more efficient. Ways to improve internal controls,
business systems, accounting practises, efficiencies, governance and culture can all be
identified through the audit process.
3. Credibility
An audit provides independent verification that the financial statements are a true and fair
representation of the entity’s current situation. This provides invaluable credibility and
confidence to your organisation’s customers/clients, stakeholders, investors or lenders and
even potential buyers. It is confirmation that financially everything is as it appears to be.
4. Detect and Prevent Fraud
It’s estimated that up to 30% of New Zealand businesses are subject to fraud, error and
corruption. Workplace fraud can occur for years without being detected and can be so
substantial that some businesses never recover financially or repair their reputations. An audit
can be an effective tool for identifying fraud and opportunities to commit fraud. Experienced
auditors are skilled at pinpointing weaknesses in an organisation’s systems and controls and
suggesting ways to strengthen these to prevent fraud occurring.

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