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What Is An Audit?

Audit is a word that has the same connotation as Dentist for many people, but it is really an essential tool in the modern business world. While all audits share fundamental principles with each other, this article will focus on audits of financial statements as opposed to personal audits, energy audits, Quality/ ISO audits etc… as they merit descriptions of their own.

Starting with the obvious, an audit of the financial statements is not something the government does to cause grief to the small or medium-sized business owner. This type of Audit Report is a highly qualified opinion as to the fairness of presentation of the financial position of a business, and the results of its operations over a period of time. The Audit is a tool that allows readers of the financial statements to have a high degree of comfort as to the general accuracy of the financial statements.

Managers can benefit from an audit report in that they may be able to better understand the economic consequences of their management decisions- changes in systems, staff and resources should lead to change, and positive or negative, these changes should manifest themselves on the bottom line each year. For larger businesses, major structural changes will impact on operational costs, production values and productivity but if there is no in-house accountant on hand to prepare a series of Financial Statements, then a Chartered Accountant may be needed to help provide this information. There are many ways of measuring change in the workplace, but an audit report is without a doubt one of the most detailed, unbiased and exacting forms of measurement available.

Business owners will benefit from an Audit when they are looking to make major changes in the nature of their business- whether it is to sell the business, to buy another, to meet compliance requirements from investors or shareholders or to check that internal controls are functioning as they should. When selling a business, it is of course essential to know the true financial position of the business in order to effectively establish a fair market value for it. The same applies when looking to buy a business- given the costs involved in even small purchases, the standard review engagement or notice to reader may not prove to be accurate enough to inspire confidence in the prospective buyer. Remember that outside investors will not accept internally generated financial statements that may be biased. An Audit Report is the most effective means of addressing the needs of your investors and shareholders and of course, a detailed and reliable audit report is useful as a tool when readying them for a proposal for further infusions of capital or major investments.

In an era of accounting scandals and financial meltdowns, it is essential that business owners, stakeholders and key management personnel ranging from strategic planners right down to floor managers have the detailed and qualitatively superior data derived from an audit report to help them make the most of the business and its resources. To learn more or to arrange a free consultation, please contact Simkover and Associates today.
What is a Small Business Audit in Canada? | Simkover and Associates Chartered Accountants in Markham, Ontario

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