In an audit-ready business, accounting information and bookkeeping is up to date and transparent. Such a business is ready for an audit at all times. Investors have trust and confidence in an audit-ready company/business.
An audit is an investigation and analysis of bookkeeping and accounts by an auditor compared to the stock/inventory’s physical verification. An audit can be done internally or by external auditors to check all accounting information and bookkeeping.
Internal audit is done by the company’s employees or by the head of a particular department in a company.
An external audit is done by an external auditing company or by a team of external auditors. All government and private registered firms are bound to get an external audit done annually. An independent company does an external audit. The external auditor prepares an audit report after the completion of the auditing process. Audit report information can be used by the investors, government agencies, and by the public.
Use of accounting software in small to medium-sized businesses aids in keeping a business audit-ready all the time. Using the software helps in keeping the bookkeeping and accounting work up to date.
Perks of Audit-Ready Business: Winning Investor Confidence
There are so many perks of an audit-ready business. A major perk is that it builds investor confidence in the business.
- An audit-ready business means that the business has up to date accounting and bookkeeping information, so it paves a way to increase investor confidence and trust.
- An audit-ready business means its accounting statements match, and the accounting and bookkeeping information of the business is transparent. This increases the credibility of the business, and investors can safely invest capital in the business.
- Investors can easily interpret the business’s accounting information if the bookkeeping and accounting data is up to date and clear.
- Investor confidence increases when they receive regular audit reports.
- In dire need of foreign investment in the business, audit-ready business always attracts more investors and customers.
- All businesses that get regular audits done, both internal and external, have an increased business rating. Potential investors will more likely go for a business that has a good rating.
- Not only investors but banks and other lenders have more confidence in an audit-ready business.
- Investor confidence is increased in audit-ready businesses because fraud and embezzlement in the business are minimized. Small and medium-sized businesses are more prone to fraud. Regular audits minimize frauds, as maintaining an audit-ready business reduces the chance of fraud.
- Investors want to obtain an accurate financial picture of an audit-ready business. They can invest their money blindly in any business. An accurate financial picture can only be accepted if the accounting and bookkeeping are up to date and the balance sheet, financial statements, and cash flow match. The audit-ready business builds investor confidence by clearly depicting the financial picture. The investor will be ready to invest money whenever needed in the business.
- Regular audits keep the business audit-ready at any given time. The investors do not have to check daily bookkeeping. A check and balance can be maintained through audits. Investors are getting the audit reports and indirectly have control over day to day bookkeeping and accounting functions going on in the business.
Conclusion
Investors have more trust in audit-ready businesses. Audit-ready companies always have up to date accounting information, and their accounting statements match their daily bookkeeping functions. Investors can make wise, timely, and future business decisions with regular audits as the audit-ready business depicts the business’s actual financial status. Investor trust and confidence are built in an audit-ready business. Potential investors are also more attracted to audit-ready businesses.
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