Don’t Skip Annual External Audits: Here’s Why?
Credibility can take you places. A person is said to be credible when his image outside his friends and family is said to be of a true and fair individual. The same goes for any company. A company is said to be credible when the people outside the organization think that it is credible. How can a company achieve this? By getting external audits done.
During an external audit, the board of directors appoints an auditor who is in no way associated with the internal or external workings of the company. This freshly appointed auditor checks if the company’s finances are in line with the laws and the auditor himself/herself operates within a given set of rules.
What are the benefits of doing external audits for the board of directors?
The external audits are requested majorly by the board of directors, who are in fact the shareholders of the company they want the audit to be done for.
1. Transparency: This independent review of the company’s financial statements by an external person, who has the confidence of the board of directors, provides them with transparency into the workings of the company.
2. Confidence: External audits give shareholders the idea that the company is still working in their interest while avoiding malpractices. This gives them a sense of confidence in the company in which they are investing their money.
3.Increased attention: This external audit may bring some of the issues to their attention now that were earlier missed for some reason. This might solve a lot of existing problems and confusion.
4.Insights: The external audit gives more insights to the shareholders as they are able to understand the financial workings of the company more closely after getting external audits done.
What are the benefits of doing external audits for the company itself?
External audits are beneficial not only to the shareholders but to the company as a whole as well. Let’s look at how they help the company:
1.Credibility: As we saw earlier, a company can easily gain credibility by getting external audits done and gaining the confidence of an outsider. She/he is the person who decides whether the company is operating fairly or not.
2.Discovery of errors: An external audit in Dubai might bring out errors in the financial reports of the company which were yet to be neglected. This gives the company a chance to ensure proper work by rectifying these errors.
3.Expert review: This external auditor hired by the board of directors is an expert in this field and knows how things should be. The company can now receive this expert’s opinion and make changes accordingly.
4.Solve legal or tax problems: The company might be facing legal or tax issues due to some minor mismatch in the financial statements. External audits can help fix these issues.
Getting external audits done can help smoothen the relationship between the shareholders and the company by building trust and improving communication. Not only that, the external audit improves the overall functioning of the company. It gives the business owner a sense of relief when she/he knows that their company is complying with all the legal requirements and is working within the set limitations of the law.
Therefore, missing external audits can result in creating a bad image of the company in the eyes of its shareholders and even outsiders for that matter. This might affect the company’s business because if a company can’t be truthful and transparent to its shareholders, then how can the customer trust it?
How can CDA help to conduct a smooth external audit?
CDA, being one of the best auditing and accounting firms in Dubai, provides a robust one-step solution for all its clients in a personalized manner. CDA always looks to render professional service without any errors to the clients to meet their expectations related to accounting and auditing solutions. The CDA is always ready to provide its solutions where it counts and enhance the accounting and auditing systems of its clients. Providing such quality services to the customers is the main motive of CDA. To find out more, feel free to contact us.