How is External Audit an Essential Part of the Business?
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Whenever we talk about the audits, most of the business owners get fretted instantly. They associate audits with harsh business auditing agencies that come with an aim to find faults with your organisation and its business operations. In fact, the audit is so misunderstood that people fail to distinguish between the different types of audit - internal and external. While both of the types have some common characteristics, the core processes differ in each one. Each one has a different set of objectives and a different set of audit responsibilities. In the following post, we are going to discuss the external audit processes and how they are highly beneficial for your business and its growth.
Before we begin, we want to point out that external audits dig deep into the business models and business processes to find out any operational flaws, wastage of resources, frauds and illegal business activities. Unlike the internal audits that are done under the orders of business management or owners, the external audit is ordered by the business stakeholders to find out anything and everything that might be or is wrong with your business.
As countries like Dubai have a highly active and lucrative business landscape that comes with different business zones, audits are one sure-shot way to ensure legal operations and tailor business workings for growth and profits. If you are also seeking an audit firm in Dubai, you can opt for some reputed agencies and companies that offer a wide range of services and that can take your businesses in the right direction.
Now, let us move on to find what makes the internal audit an important part of your business.
Why is external audit important?
1. External Audit ensures Compliance with the Government Regulations
Government norms and tax regulations change from time to time. As a business owner, you might easily miss out on them and can bring your business under the scrutiny of the taxation office. However, an external audit assesses your business in a critical and bias-free manner that guarantees proper testing of your business operations. The auditors also check whether your company complies with all the latest rules and tax regulations or not.
The external audit in Dubai is done by an independent firm that is not related to you and your business, the experts evaluate your business operations without any fear or emotional attachment. They are not subject to any kind of repercussions if the results of the audit are not in your favour. Hence, you can make sure that your business stays legal and compliant to all the latest government policies and taxation regulations.
2. Offers the exact picture of your internal Business Processes
The importance of external audit lies in the fact that it is done by an independent agency or company. As they don't have any personal motives included, they can dig the earth in an utmost bias-free manner. They can observe and assess all kinds of business operations, financial activities and departments with an unnerving fair eye and can help you in identifying all the areas where your business is lacking. The external auditors are not concerned with the employee happiness only or the business owner's interest only. Hence, they can guide you regarding all the resource wastages and monetary costs with a fair opinion. Apart from this, the expert external auditors can also help you come up with new policies and business agendas to ensure profitable functioning and growth-oriented working.
3. External Audit controls the quality of Internal Audit
As many companies form harmonious corporate and internal relations with the internal auditors, they are sometimes not able to work in a bias-free manner. Such things tend to lose transparency and efficacy of an audit over time and can lead to serious business issues. The scale of such business mishaps matches the scale of your business. The larger a firm is, the harder it is to find everything that is wrong with it.
Hence, an external audit done after an internal one can double-check the work done by an internal auditor. The external auditors can ensure that the previous audit was done thoroughly in a comprehensive and accurate manner. It can also find whether the internal audit was reflective of the financial status of your company or not. Some other areas where an external audit can play a crucial role are - tax compliance, accounting, training internal auditors, confirming legal business operations and confirming compliance to the latest taxation rules.
4. External Audits impart Business Credibility
When an external company that shares no mutual interests or benefits with your company does the audit, its reports are considered highly credible and reliable by the stakeholders and investors. They find your financial statements more convincing and more grounded if they are vetted by an external audit firm. Hence, all in all, your business processes and their goals become more appealing, more credible and honest after an external audit. The stakeholders and business investors can rest assured about their investments and can easily work with you for the long term.
The external audits also build a transparent and reliable brand image in the market and consumer bases. Hence, they are crucial for small businesses as well; because they are struggling with their brand reputation. After an external audit, they emerge as clear and transparent business entities that can be easily trusted by the investors and stakeholders.
Hence, we can conclude that an external audit is certainly a must-do process and no business, irrespective of its scale or type should refrain from it.
We hope all our readers find this write-up helpful and can get motivated towards an external audit.
Thanks for reading!