When Does a Business Need an Independent Audit?

Without regular and proper audits, your entity may be risking operational efficiency and compliance to various industry and legislative standards. An independent audit is the process of an external party examining all the financial records, statements, commercial transactions, accounting practices and internal controls of an existing entity. For an audit to be independent, it must be conducted by an external certified accountant (otherwise known as an auditor), to uphold the reliability of the audit at hand and to avoid any potential conflict of interest.

 

Discover how an independent audit can benefit your business:

Entity Criteria
Public listed company
Public unlisted company (other than limited by guarantee)
Large proprietary company Revenue > $50 million

Gross assets > $25 million

Number of employees > 100

(2 out of 3)

Companies limited by guarantee Revenue > $250,000
Trade unions
Incorporated association Review at audit for tier 2 and 3
Australian financial services license

 

Looking to get investors or apply for a grant

When an entity or charity organisation is looking to apply for a governmental grant, they might be required to have an external audit. This is to verify company statements and ensure that the accounting figures are honest and impartial.

Additionally, an external audit can actually boost the credibility, reliability and trust of your investment proposal, and can be instrumental in acquiring salient investors to participate in your business’ venture.

 

Looking to secure a loan to expand your business

If your company is looking to obtain a loan, lenders will often necessitate an external audit. This is often required to safeguard their investment in your company, confirming that the figures in each financial statement and transaction are honest and correct.

 

Looking to sell your business

Many business owners plan to eventually sell their company and in return hope to obtain a financial profit. If you are looking to sell or plan to eventually do so, having an external audit undertaken will boost the reliability of your business. External audits deliver confirmation of trust and credibility of your financial statements.

 

From legal obligations to selling a business or acquiring investors, external audits can greatly strengthen the integrity and reliability of a business’ operations.

For more information or if you require assistance in undertaking an independent audit for your company, please contact our Morrows Audit team today.

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