What is a financial audit and why is an audit required?
September 21, 2020
If you need an independent opinion on the financial statements of your business, there are numerous benefits to completing an audit.
An audit provides an impartial examination and evaluation of your financial statements to ensure that they are fairly presented and meet generally accepted accounting principles.
But when is an audit required? Businesses and organisations are required to complete an audit for a number of reasons, including regulatory requirements and financial decisions.
Read on to learn more about why financial audits are required and how they can benefit your business:
Why is a financial audit required?
A variety of businesses and organisations require financial audits from registered auditors to meet certain regulations.
Among those that need their annual financial reports audited are companies other than small proprietary companies, registered schemes, and disclosing entities.
Medium-sized charities with annual revenue of more than $250,000 may choose to have a review or an audit, while large-sized charities with annual revenue of more than $1 million, and certain other organisations, need to have their financial statements audited too.
Companies and organisations may also be required to undertake an audit if they are applying for a government grant or seeking a loan.
A financial audit may also be required if you are planning to exit your business to give the potential buyers of your business additional confidence.
The benefits of getting an audit done
Financial audits can add real value to your business because they lead to better decision-making and ensure that your financial statements are up-to-date and accurate.
Audits can help you manage complex compliance requirements for your business in light of all of the international accounting standards that exist.
If you’re bidding for a tender in the public or private sector, a financial audit can improve your chances of winning the tender.
An audit can make your bid more compelling and competitive because it gives the government agency or private sector party that you’re applying to increased confidence that your financial information is sound and accurate.
An audit may also detect signs of fraud, which is especially important for small or medium enterprises when owners are not actively involved in the day-to-day running of the business.
Work with LDB’s audit experts
If your financial statements require an audit, the team at LDB will ensure that your business receives real value from your audit.
We have worked with public companies, large and small private companies, not-for-profit organisations, and self-managed superannuation funds (SMSFs).
If you have questions about financial audits and what they mean for your business, phone (03) 9875 2900 or email us via the contact form below and a member from our audit team will be in touch.