There are many entrepreneurs who feel that their Small Business requires traditional auditing procedures. Some wonder why? According to industry experts, auditing is compulsory to provide a high assurance level in certain cases. There is no other substitute for it. Third parties, such as lenders and investors might consider that their decisions on financial statements are based on your present financial conditions. They may be eager to know the following:
- Reported cash-flow accounts from business operations for money received.
- Revenue reporting accounts in the specific accounting period for all sales.
- Full collection of accounts receivable.
When Startup Auditor is not necessary for your business?
Auditors may be hired by 3rd party financial statement users even when there is no need for it. Often, a full audit may not be necessary to derive assurance to identify your financial statement reliability. You can choose a diverse assurance level, based on your organization as well as who had made the request for financial statements.
How can the CPA help your Startup Business?
The traditional audit is complex and expensive. Hence, you need to understand some of the other assurance levels for your company’s financial statements. The CPA can offer the following:
- Agreed-upon procedures: He/she can offer a review based emphasizing a single aspect pertaining to your financial records. The provided report offers crucial information. However, it comes without any assurance.
- Compilation: Financial information about your company’s management is provided in the standard format. However, no independent 3rd party verifies the balances.
- Audit: The CPA verifies and confirms crucial financial information as well as examines the internal controls of your Startup Business. CPA assurance offered in this regard is of the highest level.
- Review: The CPA compiles all vital management financial information collected. Then, the number is evaluated to some degree, trying to identify internal financial logic. It is quite similar to an audit, however, comes with limited assurance.
An audit involves lots of hassle, time and expenses. This is why a good number of Small Business tries to avoid carrying out an audit for some time. With increasing audit costs, there are other assurance options available that is quite appealing when compared to traditional audits.
Why Audit Management Software Is Essential To A Startup Business?
Is your startup company audit-ready? You can be in complete control of your quality compliance and process by using a reliable tool to make this aspect of business operation more straightforward, objective, and data-driven. By doing so, you can streamline your audit management according to regulatory standards, stakeholder expectations, and business quality requirements.
Below are the benefits of having audit management software for your startup company:
- Better Quality Audit Management: Promotes better management of your company’s entire quality audit process, including planning, assessment, implementation, approval, and reporting.
- Convenient: Your audit management team can save time and effort on manual auditing work because of automation. In this way, your new employees can focus on the essential business operations of your startup company, such as customer service and production.
- Increase Revenue: You can increase your company’s profits with the help of auditing software management, allowing you to view and analyze where your money goes. It helps streamline your marketing budget, material spending, accounting, bookkeeping, and overall business cash flow analysis.
You might want to learn about ETQ’s compliance auditing software and other audit management strategies by checking reputable online sources. In this way, you can decide on the best quality audit management software for your company intelligently.
When to hire the services of a certified Startup Auditor?
Given below are a few situations that may require your business to avail of an audit from a qualified auditor.
- Pre-IPO: You will require auditing services if you desire to list your Small Business as a public company. Doing this will allow you to sell your company shares to the public in general.
- Selling off: There may be some circumstances that may require you to sell off your business. In such a case, potential buyers will be interested in companies that are well audited.
- Lender: Generally, after Series B or C, lenders will seem to invest in companies that are properly audited by a certified Startup Auditor. But having low-level reviews is not likely to \suffice in such cases. Some investors may request a full audit to know your company’s pre-revenue circumstances. Moreover, an audit will be mandatory as your business matures.
Before requesting an audit, you need to find out the type of assurance level requested by 3rd party financial statement users. Also, get to know if low-level assurance is sufficient.
Understand that conducting audits from time to time is good for your Startup Business. You should maintain solid financial records as well as document your process. At the same time, you should be in full control of all financial transactions taking place in your business. It should also include those not affected directly by your cash balance. This way, you can smoothly run your business and achieve sure success.