Financial statements of a company are necessary to plan future investments, capital expenditure, gauge the performance of a company, etc. In cases where the financial statements are flawed or do not represent a true picture of the firm’s dealings, future planning can go for a toss.
Organisations hire auditing firms so that they bring relevant knowledge and expertise to financial statements recording. After all, ensuring financial accuracy is one of the top priorities of a well-performing organisation. The auditing firms, however, may not be the best fit for every organisation. Their methods of conducting an audit may not suit the organisation’s working methods. It is, therefore, necessary to choose the right auditing firm for your business.
Look for auditing firms that can give you a proof of their expertise and qualifications. They should have the right certifications and degrees to conduct an audit of your company. With their licenses and external auditor permits confirmed, you can go ahead and look for other possible requirements from your auditing company.
Who can conduct an audit?
As per the Indian law, only a chartered accountant, a chartered accountant firm or a limited liability partnership firm can conduct audits of a company. The companies act 2013, disqualifies these individuals or firms from being an auditor.
- A corporate body other than registered under the limited liability partnerships act, 2008
- Any employee of the company or an officer
- A person who is a partner with an employee of the company
- A person who is indebted to a company
- Any person who has held any securities in the company after one year from the date of commencement of the Companies Act 2000
Any person convicted by the court for an offence of fraud and the period of conviction has not elapsed from the date of conviction.
Right functional fit
Hiring a firm that conducts all different kinds of audits is a wise decision. Otherwise, most of the time will be spent chasing auditors, negotiating prices and services with them. One company that can do it all is prudent because otherwise, you will have to give multiple audit companies access to your financial statements. This is not a wise decision for any business; besides, hiring a single firm for all functions will also be less time consuming and pocket friendly.
The auditing firm you choose to associate with should have a value proposition that is apparent and appealing. It should also have a decent reputation in the market. Consider this – if you choose a firm that has everyone speculating their auditing expertise, it will lend you and your company some bad reputation too. Similarly, associating with a renowned and reputed auditing firm will give your financial firms and actions some credibility.
Check the experience of auditing firms you are considering. It is likely that some auditing firms will not have the experience you are looking for. Some firms might not even have any experience at all for your industry. While it is brave to try new things, working with an auditing firm that already works with companies from your industry will only be beneficial. They will be aware of the pain points of your industry and audit statements accordingly. They might even charge you less because less effort will be involved on their part, and the process will not take long either.
Even though it is an auditing firm, how they treat their clients is an important determinant. Before finally signing an agreement, you need to meet with the senior-level management as well as the team that will handle your account. Go ahead with the decision if you feel comfortable opening up your financial books to them.
The process of auditing doesn’t have to be tiresome. Find a trustworthy company and team to handle this process for you. Once you present your financial statements, they should take it from there.
Any company should consider their annual audits as regular check-up appointments. Just as any regular check-up appointment helps you keep healthy, annual audits also ensure that your company’s financial health remains alright. The task of choosing an auditing firm must be a bit daunting because you will have to give them complete access to financial books, but the right company and partnership should make it easy. Choose the right auditing firm, and auditing will be as simple as going to check-in with your doctor.