There’s a lot at stake in managing and documenting your business’s financial affairs in the right way. The act of producing and filing accounts is central to business regulation, not least for administering the tax system.
And just to underline how important the authorities view this documentary process as being, they’re not content with taking written evidence at face value. Once a business reaches a certain size – generating turnover in excess of £10.2m – there is an added legally-binding obligation to have your financial processes audited, which can be viewed at least in part as making sure you have done the documentary part right.
Small businesses that fall below the compulsory business audit threshold don’t have to subject themselves to regular scrutiny, but there are good reasons why they should. An audit, carried out by a suitably qualified third-party, can reveal things about your business that even the most diligent of owners miss, it can help to improve transparency in financial matters for all stakeholders and, ultimately, the insights provided can contribute significantly to ongoing improvements in performance.
But in order to get such benefits, you need to choose the right auditor – ideally someone who you are going to be able to forge a close working relationship with in the long-term, giving them the chance to really get under the skin of how your business operates so their expertise has the best chance to add value. Here’s what to look out for in making that all-important decision.
Accreditations and reputation
There are different types of qualification and industry accreditation depending on what types of services an auditor offers. In order to audit company accounts in line with statutory requirements, all professionals must be qualified chartered accountants certified by one of the main accountancy professional bodies (e.g. ACCA or ICAEW), and they also must be registered as an auditor with the government. For internal auditors offering non-statutory business improvement services, look for certification through the Chartered Institute of Internal Auditors (IIA).
As well as formal qualifications and professional accreditation, reputation really matters when choosing an auditor. Ask around your networks for recommendations, paying particular attention to favourable mentions on things like customer service, communication and relationship building.
Companies operating in different sectors of the economy can have very different needs when it comes to carrying out a business audit, and not just on matters of taxation and accounting compliance. KJG, for example, is registered as a licensed practitioner by the UK Civil Aviation Authority helping to administer the ATOL air travel accreditation scheme which provides financial protection to travellers. Other specialist roles carried out by auditors include assessing internal quality management systems for ISO accreditation and auditing compliance with PCI DSS data protection standards for any organisation that accepts credit card payments.
A personal connection
Finally, we can’t overstate how important building a good relationship with your prospective auditor is if you to get the most out of them for your business. Much like taking on a new member of staff, that ‘feel’ you get for how you will fare working with that person during interview is just as important as qualifications, reputation and expertise. Take the time to hold face-to-face meetings with a would-be auditing firm before you make an appointment. Find out how they operate – will the person you meet be taking charge of your account, or do they just send in senior partners to win the business before delegating to a more junior member of the team? Remember, it isn’t the firm that will deliver the service you want from an auditor, it’s the individual assigned to you account who you need to build the relationship with. Make sure you know who they are and see what kind of relationship you can build with them before making the hire, as they will be in and around you business for a long time to come.