Company Audits are vital for any business in Singapore, unless you are exempted from audit. Auditing makes sure that financial statements put out by businesses are fair and authentic. There are several conditions laid out under the Companies Act, one of which requires a company to appoint an auditor who is an individual or part of an audit firm in Singapore. However, other than legal requirements auditors are crucial to companies for several other reasons.
1. Authentic and accurate financial statements
By law, in Singapore, all companies within 3 months of incorporation need to appoint an auditor. However, this doesn’t apply to a “small company”, “small group”, or a “dormant company”. So, unless your company falls into such a category, you need an auditor. An auditor examines the financial statements of your company to authenticate them as true and fair. It helps your company to follow the regulations and be compliant with them.
2. Standards of accounting
In Singapore, company registration and doing business is extremely easy as it is evident by the country’s rank in the index of ease of doing business. However, accounting methods and practices may not be up to standards. An auditor from an audit firm in Singapore reviews those accounting practices so that the company can prevent fraud by following those steps and standards. A licensed auditor informs a company and its shareholders about the company’s position in the context of following standard principles and guidelines of accounting.
3. Internal rules and protocol
Auditors assess and verify the internal procedures and controls put in place by a company during their auditing sessions. This goes a long way to identify key areas in dire need of improvement. New accounting systems and technologies used by a company can also be tested by auditors for performance evaluation.
4. Promotes accountability in employees
Audit reports help you to identify the key areas in your functional and operational strategy that need improvement. It also allows you to detect the employees in your company that need to improve their performance. Any employee or manager that does not fulfil their goal can be held accountable. When the members of an organization learn that they can be held accountable, they strive to improve their performance and fix problems instead of relying on excuses.
5. Provides a different perspective
Auditing is done by a professional who is not a part of your company. Since they are not attached to your company in any way, they can examine the performance of the company in an objective way. Thus, an audit report allows you to receive a different perspective of the company. This can help you to identify problems that you couldn’t detect before and refocus your business strategy before it gets too late.
6. Enhances the reputation of the organization
When you hire an auditor from a good audit firm in Singapore, it demonstrates your sincerity and dedication to all the stakeholders of the company. A good audit report can also improve public perception, improve your credit rating, and increase the business valuation. A good reputation can put you in the low-risk category and allow you easier access to bank loans and third-party investments.
A financial audit provided by a good audit firm in Singapore can paint a clear picture of where your company or organization is heading. You would have access to more information that will help you to make better plans or create better solutions. Even if you are categorized as a ‘small company’, doing an audit can be beneficial for your company due to the reasons stated above. For more information, visit our website.