What is an audit and why should you get one?

Feb 18, 2022 | Business

Unfortunately, not all company directors think audits are all that helpful. They might find them too disruptive to their everyday work or that they won’t tell them something they don’t already know.

It doesn’t help that the audit process is rather complicated and not every accountant is particularly good at explaining how what they’re doing is adding value to your firm. 

That’s why we’ve written this beginner’s guide to audits.

What is an audit?

An audit is the examination of the financial report of an organisation by someone independent from that organisation. 

The financial report, presented in the annual report, includes a balance sheet, an income statement, a statement of changes in equity, a cashflow statement and notes summarising accounting processes.

The purpose of an audit is to give you an idea of what is going well in your business and what needs to be improved.

You can choose to get an auditor in, but some audits, such as statutory and grant audits, are compulsory.

What happens during an audit?

Any good audit will begin with meetings between the auditor and company directors to discuss the business, its philosophy and work practice so the auditor can tailor the audit to the client.

They will then examine the books and records to ensure that best practice are in place. They will also make surethe business is compliant with policies and regulation.

At Langdowns DFK, we also assess our clients’ IT projects, systems and technology to check everything is running as it should be and your day-to-day business activities are running as smoothly as possible.

We do all this and more while being as unobtrusive as possible. A good auditor is there to observe, record and test your business – not stall it.

Benefits of an audit

A well-run audit will allow you to identify opportunities to improve your internal procedures, guard against risk and help you plan for the future.

From the audit process, our team will have learned a lot about your business, perhaps more than you even know about it. 

Using that knowledge and our experience of working with countless other businesses, we can then give you insightful information and advice to make your business a larger success than it already is.

Audits are also great tools to reassure shareholders that not only have their investments been lucrative, but that you’re a proactive businessperson who is always looking to take the next step.

Bear in mind, too, that audits give you an unbiased review of your business, at least in theory. For us, this is hugely important, because you can only take steps to improve if you know your true value.

A fresh perspective from a well-experienced team might be just what you need, but how can you be sure you’re getting a good audit?

How to prepare for an audit

At Langdowns DFK, we are more than willing to help business owners new to the audit process get started and ready – we’re flexible enough to help you out, too.

First, get in touch with us as soon as possible, even if you want us to get to work in several months time. That’s because the planning process on our end is a huge part of the entire audit process.

Part of our planning includes getting the documents we need from you to do our job properly. Financial documents, including sales figures, cash receipts, purchases and payroll will be valuable as well.

We will also need documentation detailing your company’s obligations, such as your current loans and lease agreements.

Contact us to arrange your audit or read more about our audit process.

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