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Running a small or medium-sized enterprise (SME) requires you to wear a number of hats, but there are certain areas that are unlikely to fall within your expertise and may require a third party expert. Your auditor is one such third party expert service that is especially important to give a view on your performance and management.
Here we look at why you should find it necessary to employ the services of a professional auditor to assist in matters pertaining to your tax, risk assessment, financial control and reporting.
Leave your financial controls in the hands of experts
Most of those who start businesses are very passionate or at least very knowledgeable of the industries in which they operate. You may have decent skill and knowledge in these areas, or have employed some of the best employees to assist in taking care of the operations. However, matters pertaining to financial controls, tax compliance and reporting standards are not really the reason why you are operating your business, unless you are an accounting firm. In the event that you are not an accounting firm or the rare pure “Jack of all Trades”, the services of an auditor may assist you to focus on the reasons why you actually started your business and still be up to date in your financial controls and tax compliance.
You may have some good accounting knowledge and do your own accounting work, but due to the continuous changes, for example in accounting standards and tax legislation, it’s advised that you use an auditor to provide the attention to detail you need and to ensure you are in line with current compliance requirements.
Improve your credibility by using external auditors
The independence of auditors gives investors and others the comfort that a third party reviewed the system and the financial statements of the company, hence the information provided is more sound and reliable. In a world where economies are moving in and out of recession, investors find it harder to part with any funds without a further due diligence in addition to taking a business owner’s word that a business is in a good financial position. Banks may also request audited financial statements prior to giving companies access to credit facilities. By employing an auditor you demonstrate to your business network that you are open to scrutiny and that you value financial and regulatory compliance.
Protect your network with the expertise of auditors
Malware, spoofing, Trojan horses, spear-phishing... these terms seem better suited to medieval warfare than the everyday cyber security lexicon of any company. While the jargon may sound somewhat familiar, most company networks are not too distant from the possible interaction with these threats. SMEs are mostly concerned with having an IT solution that is functional for its operations and rarely do they consider the security of their networks. In today’s world it’s very necessary for an entity to have a system review done by internal or external IT auditors to ensure one is not a possible statistic of cyber attacks such as the recent “WannaCry.” Contrary to public perception, defending enterprises from rising cyber threats doesn't necessarily require spending millions of dollars. Consistently adhering to cyber security hygiene (cyber savvy workforce, regular backups and testing, patching, access administration, vulnerability management, cyber response drills, etc) can significantly boost cyber resilience.
Post audit improvements can make an audit pay for itself
The services of an auditor may appear like an expense overhead, with very little benefit or any form of recovery at all. However, the auditor is a professional advisor whose intervention often results in process improvements that may lead to cost reduction over time. Usually the benefits of having an external audit in terms of streamlining financial processes make its costs worthwhile. Auditors note potential non-compliance issues earlier - before it costs the company much more in fines. The cost of a compliance failure can also be far greater than the audit fee.
In the past only big companies would hire the services of auditors and in some cases this was done just as a matter of compliance. However with the services of auditors expanding, compliance requirement lists lengthening, fraud, risks and scams increasing and accounting and tax treatments becoming more complex due to globalisation, hiring an auditor is something every SME should be strongly considering.
Rufadzo Bonyongwa
Audit Manager, Johannesburg
