Having to undergo an audit is not only stressful but it is a lot of work and takes up quite an amount of time every year. This has led to some welcomed relief for many smaller and owner managed companies in recent years. The new Act aims to provide relief for many private and non-profit companies in that they do not have to undergo an audit; this will only become necessary when it is in the public’s interest. Owner managed companies will not have to be audited, unless their Public Interest Score exceeds 350 points.
An audit allows a company to identify any areas within their business practices that need improvement and shows high risk areas that need attention. In many cases, shareholders need the assurance that their investment is safe and that financial statements are accurate. An audited company is more likely to attract new investors too, which is often why people consider being voluntarily audited. Here are a few things to consider if you are thinking about having an audit done:
- Even if you are a smaller entity, your shareholders might benefit from an audit;
- Your financiers may insist on an audit;
- You might improve your chances on winning a tender if you are audited;
- SARS will take more comfort in your financial statements;
- If you decide to sell your business in future, an audit may help to substantiate your selling price.
Apart from an audit, you might also consider an independent review, in which case they won’t dig as deep to find any problems. For e.g. they will state “……nothing has come to our attention that causes us to believe that these financial statements do not present fairly, in all material aspects…”. An independent review will never be as thorough as an audit, so it might not have the same assuring effect. However, it is never a bad idea to undergo a review; you just need to consider your goals and needs.
Colin Smith & Co provides auditing services to small, medium and large businesses. They have a unique approach that will identify their clients’ risks and will provide solutions that are tailored to a specific market environment to ensure quality and value auditing services.