Running a business presents a certain level of risk. Just a couple of the things businesses need to protect themselves against include cyber-security threats and fraud. When you’re struggling to keep on top of just the day-to-day running of a company, it’s difficult to focus on potential threats too. That’s why the majority of successful businesses these days, hire the professionals.
Auditors are considered a vital investment for those looking to ensure they are complying with the law and their financial books are accurate. But why hire a professional auditor rather than do one internally? Below you’ll discover why businesses often choose to get auditors in, rather than doing them themselves.
What does a professional auditor bring to a company?
There are a surprising number of benefits that come from using a professional, external auditor. While it may be costlier than carrying one out yourself, in the long term it can actually save you a lot of money.
First and foremost, a professional auditor can help identify any errors in your books. When you’re busy running a business, it’s easy to make mistakes. What’s more, you may not have the time to go over the books to look for potential errors. Mistakes don’t just have potential legal repercussions – they can also help you identify potential fraud within the company and give you a much more accurate idea of how the business is doing.
You’ll also be considered a lot more trustworthy. This is because hiring an auditor shows you have nothing to hide and it also highlights transparency. This is something that’s become really important for businesses today. When a business showcases its earnings over a period of time or fiscal year, it becomes important to maintain honesty in the statements. Avoiding earnings manipulation (https://kailashconcepts.com/identifying-accounting-and-earnings-manipulators-2/) and other such practices is of utmost importance for businesses who wish to gain the trust of investors and shareholders. Trust is everything, so by hiring an external auditor, you’ll inevitably be showing that your business is responsible and transparent.
Another benefit is the fact that having a professional audit done gives your books a lot more credibility. This is important if you plan on asking for finance or if you’re looking for an investor. As the auditor has no real interest in your business, they’re not biased and will therefore provide a more trustworthy report. So, an investor will look much more favourably on books that have been audited by a professional company such as RSM International Limited, than they would with an internal audit.
Contractual Compliance
Business auditors play a crucial role in ensuring contractual compliance within organizations by conducting systematic reviews and assessments of contractual agreements, financial transactions, and operational processes. For instance, in the context of a hospital’s payer contract (look up “payer contracting” to learn more about this) with an insurance company, auditors would meticulously examine the contract terms, ensuring that reimbursement rates, billing procedures, and coverage criteria align with regulatory requirements and organizational objectives. They would also evaluate the hospital’s systems for tracking contract performance metrics, such as patient satisfaction scores or readmission rates, to ensure compliance with contractual obligations. Additionally, auditors would identify potential risks associated with the contract, such as contractual ambiguities or compliance gaps, and provide recommendations for mitigating these risks through enhancements to internal controls, staff training, or updates to contractual language. Put simply, by conducting comprehensive reviews and assessments, business auditors help organizations maintain transparency, accountability, and adherence to contractual obligations, ultimately safeguarding the organization’s financial integrity and reputation.
Providing training opportunities
Some auditing companies also provide internal training. Businesses hire them to double-check an internal audit and train their employees. This can save your business a lot of money in the long term, giving you peace of mind your internal team knows exactly what they’re doing.
Of course, an internal audit will still hold less weight than an external one in terms of investment. However, if you’re simply looking to ensure you’re complying with the law and you want reassurance that mistakes will be avoided, having a professional auditor train your staff is a good idea.
Overall, there are many reasons why businesses hire an auditor and the above are just some of them. Boosting credibility, protecting you from fraud, and ensuring you don’t run into legal difficulties all make an external audit a worthwhile investment.