Financial audits are stressful. But, once done, it is the most important way you can achieve peace of mind while doing business. You get to know if there are any errors in the accounts, possibilities of fraud, areas of improvement and more. Business owners who are new to the market may have plenty of queries regarding financial audits. It is more than just something the CRA does. It is an essential financial health checkup of your business that protects it from potential obstacles. 

What is a Financial Audits?

In simple words, a financial audit is a detailed assessment of a business’s financial statements and accounts from an independent and objective point of view. A qualified third-party auditor (someone independent of the organization) conducts the audit and provides opinions on business practices and associated risks. Their opinions help business owners make the right and reasonable decisions. 

What Does The Financial Auditor Review?

Whether you are planning for an internal or external audit, keep the following ready during the process. 

• Transactions and balance 
• Financial statements 
• Historical documents 
• Internal documents 
• CRA documentation 
• Financial commitments like loans 

The auditor assesses all historical data such as financial statements, invoice processing, books, accounts and more. It helps you understand whether the financial position of the company is reliable or not. 

What are the Different Types of Audits?

There are various forms of audits. Some companies hire a finance auditor while others may ask their in-house accountants to get the task done. Several business owners are obligated to conduct the audit once every year. All in all, there are three main types of financial audits:

CRA audits 

The CRA may conduct audits to cross-check the accuracy of your books, transactions and taxes. It is better if you find and fix any errors in your financial statements before they do. 

External audits 

If you ask a third party (someone with no connection to your company) to conduct the audit, it is known as an external audit. Accountants or tax consultants conduct external audits to ensure that your business is complying with the latest industry standards. 

Internal audits 

This one involves employees from the company that wants to conduct the audit. Business owners may initiate the audit. They can recruit someone else from the same company to continue with the rest of the process. 

 Why Is It Important?

It is needless to say how competitive the market is currently, irrespective of your niche. 

You should know where your company stands financially in the current market. This helps you measure risks and growth opportunities and verify the accuracy of accounts and statements. 

Regular audits provide you with an in-depth overview of the business’s financial performance. You can then improvise your strategies and costs accordingly. 

Final Thoughts, 

Audits take time, effort and attention. But, it is also an unavoidably important part of businesses. If done correctly and on time, the information gathered through audits can help your business grow and establish a strong market in the future.