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10 Jul 2015
I am sure that some organisations see the audit process as a necessary evil whereby nosey parkers come along, disrupt the finance department, ask a lot of annoying questions, and produce nothing of value!
It doesn't need to be this way: The audit can potentially be useful and add value to the business. So who needs to have an audit?
Typically this is restricted to larger entiites. However some smaller organisations who receive grants or government funding may be required to have an audit by their funders.
If you are a Trustee you need to be aware that all Charities whose operating expenses exceed $1m will be required to have their financial statements audited for accounting periods commencing on or after 1 April 2015.
An audit is optional to any other organisation. The members of any organisation, be it a club, society, church, or company, can call for an audit, and the Constitution may require it anyway. But if it is optional, there is no point in having an audit unless there is going to be some value come out of it.
What good can come out of an audit anyway? An audit can be a valuable financial health check, but it should also provide comfort to many. Funders, be they Government, lenders, or donors, will gain assurance that the financial statements have been independently reviewed and present a true and fair view of the financial performance, and position of the organisation.
More important, is the assurance that those charged with Governance can obtain about the custodianship that management is exercising. And in turn, the owners and stakeholders of the organisation can be assured of whether Management and Governance are properly discharging their duties.
That assurance should be a basic minimum output from the financial audit. But in addition to that, good auditors will also endeavor to produce additional value; something that will make the cost a good investment, rather than a costly overhead.
Auditors can do that because they can add to their own skills and training, the luxury of dealing with a wide range of organisations across a broad commercial spectrum. That enables us to assess your systems against best practice models, and make recommendations as to how your systems can be improved.
Value can also be derived simply from an intelligent review of the risk areas that are peculiar to a particular organisation. A good auditor will focus on those areas and in that way they maximize the likelihood of uncovering any problems that exist. Those problems can range from basic arithmetic errors in a GST return, the way statutory records are kept, the way Employment Contracts are interpreted, or the discovery of fraudulent activity within.
We sometimes uncover omissions, that when corrected more than pay for the annual cost of the audit.
Auditors are frequently seen as ominous beings, who shall be obeyed. That need not be the case, and if you are wanting to engage with your auditors, and wanting to get good value from the audit, you should feel free to talk it over with them.
For more information on how we can help your business, get in touch