What is the importance of audit?

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James Hadfield

James Hadfield – Audit Partner

Aside from the importance of the legal requirements for a statutory audit, the undertaking of the audit itself provides important and valuable insight.

An audit determines whether an organisation is providing a true and fair view of its financial performance and position, which on its own is something any organisation wants to achieve.

Providing comfort over the accuracy of management accounts, or revealing systematic errors occurring throughout the year, a year end audit is critical to decision making for an organisation placing reliance on management information. The process through which an audit is undertaken challenges the robustness of the internal controls and processes an organisation has in place, giving an external perspective and valuable feedback.

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The advantages of having an external audit

With more and more companies falling out the audit regime following the increase in the audit thresholds, what are the benefits of having a voluntary audit?

An external audit improves internal systems and controls

Auditors do not just focus on the numbers but will gain an understanding of the businesses overall systems and controls environment. This will enable them to identify deficiencies in the accounting systems or controls for which recommendations can be made, making your business more efficient and less prone to fraud or error.

An external audit provides credibility

Having your financial statements verified by an external auditor can lead to more credibility in the business marketplace than those that have not. Should you be seeking to raise finance or sell your business in the future, providing audited accounts gives security that your accounts are free from material error or malpractice, making you more likely to be successful in achieving your goals.

An external audit gives shareholders confidence

Many business are run by a small board of directors on behalf of the shareholders who can be remote and have little involvement in the day to day operations. An independent review of the financial statements can provide transparency to the shareholders that the company is being run within their best interests and can highlight any issues that have occurred which may not have been brought to their attention.


More about Menzies audit and compliance services

As well as meeting your statutory reporting obligations, Menzies’ audit and compliance services are the proactive way to reduce risk and drive forward your business strategy. Our pragmatic, hands-on approach helps you improve your business performance – by challenging assumptions and resolving commercial issues that could be holding your business back.

Our audit and compliance team will help you to:

  • Add value to your business by using the audit as a basis to identify and resolve commercial issues and to improve your business processes.
  • Use the understanding and insight gained from the audit as a basis for helping you develop strategies to drive your business forward.
  • Reduce risk and improve your organisational performance by challenging existing assumptions and practices.
  • Secure peace of mind from knowing your statutory obligations are met, accounts are true and potential problems have been identified early on.

Contact Menzies Audit & Compliance team

To speak to a partner or for more information about the audit and compliance services we offer please contact one of the Menzies LLP offices or complete our contact from below.