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 with the physical verification of the stock/inventory. An audit can be done internally or by external auditors to check all accounting information and bookkeeping in a company.
Internal audit is done by the employees of a company or by the head of a particular department in a company.
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 external audit is done by an independent company. 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 an 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 in the business.
- 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 accounting information of the business 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, an audit-ready business always attracts more investors and more 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 which 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 the chance of fraud and embezzlement in the business is minimized. Small and medium-sized businesses are more prone to frauds. Regular audits minimize frauds as maintaining an audit-ready business minimize the chance of frauds.
- Investors want to obtain the true financial picture of an audit-ready business. They can invest their money blindly in any business. A true financial picture can only be obtained 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 a control over day to day bookkeeping and accounting functions going on in the business.
Investors have more trust in audit-ready businesses. Audit-ready companies always have up to date accounting information and their accounting statements match with their daily bookkeeping functions. Wise, timely, and future decisions can be made by investors of the business with regular audits as the audit ready business depicts a true financial status of the business. 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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