Month: April 2019

Does your business require an independent financial audit?

When a business that is privately owned brings on board the assets for the business owner or other investors, the latter are considered as shareholders. Companies that are privately held and have been formed as C-Corporations have an allowance to have an unlimited number of shareholders, and this makes it ideal for larger private companies. C-corporation companies are not subjected to the regulations of the Securities and Exchange Commission. Also, unlike public companies, the private corporations may not require a mandatory independent financial audit although banks and other entities may require audited statements for purposes of industry regulation compliance and debt covenant.

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What you should know about financial audits for private companies.

An audit for a privately held company is done by a third party, and it solely focuses on evaluating the credibility and accuracy of financial statements for the company. The auditors are to ascertain if the accounting processes executed adhere to corporate procedures and policies. Also, the auditors determine whether the financial statements of the private company follow the acceptable standard principles of accounting. Once the exercise is complete, it is mandatory for a written report to be issued by the audit firm to the company. The written audit report should give an opinion concerning the dependability and fairness of the financial statements of the company. The audit process for a private company differs in type and scope to that of public companies. The audit process for public companies is more complex than for C-corporations due to the regulations of the Securities and Exchange Commission.

Planning for an audit for private companies

The auditing process follows a standard procedure guided by a plan laid out by the International Auditing and Assurance Standards Board. The process follows the following three key steps:

The first step of the process requires the auditors to familiarise themselves with the systems of internal control, the operating environment, and the business in general.

In the second step, the audit firm uses the data gathered to evaluate the possibility that the financial statements of the company contain misstatements and significant errors.

In the final stage of the process, the audit firm comes up with ways to tackle the internal control risks found during the planning stage.

Implementing the external audit plan

This section is the action phase of the audit process for private companies, and it targets to implement the audit plan. Some of the activities involved in the execution of an external audit plan include the following: random samples of accounting records and financial statements are inspected, creating an audit blueprint by tracing transactions from sender and receiver, comparison of the financial information gathered from the company and the financial statements that already exist.

Furthermore, the standard corporate procedures are also reviewed by the auditors, and this can be achieved through interviews of various institutions in the company.

Presentation of the audit results

The final report of this exercise should contain three primary sections. The first paragraph entails general information including the process followed … Read More

Do You Need an Accountant for Your Business?

If you are a business owner who has yet to decide whether or not to hire an accountant, you have already asked yourself: do you really need an accountant for your business? Whether your business is involved with jobs in Canada, jobs in the UK, jobs in the USA, jobs in Australia, there are many situations where hiring an accountant will be beneficial for your business now—and in the future. If you do end up deciding that an accountant will be a good fit for your business, consider using a site such as Joblang that will give you access to countless job applicants at your fingertips.

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Do you have accountant experience?

First: do you have any accountant experience yourself? In other words—could you do the job on your own? If you have zero accountant experience and you are facing any sort of complex issues, you will quickly find yourself in over your head. And when it comes to business, being in over your head can quickly spiral downwards; if you have no accountant experience, it’s best to hire an account for at least crucial financial aspects of the business in order to avoid mistakes that could spell disaster for your business’s finances.

How big is your business?

Do you run as small brick and mortar business? A local franchise with 3 retail shops? An extensive international business? As a general rule of thumb, if your business has extended beyond a hobby in your own home, then you can benefit from hiring an accountant. The larger and more complex your business, the more essential hiring someone in this role becomes.

How many clients do you manage?

Another factor to consider is the amount of clients you currently have at your business. It can be difficult tracking the many financial aspects involved with clients when you have dozens of them, each with their own orders and contracts and other factors that could impact your finances if left unmanaged. If you find yourself with an extensive client roster, then bringing in an account is the way to go.

Do you plan on expansion?

You need to ask yourself: what are your plans for the future of your business? If you plan to expand at all in the near future, then you will almost certainly need the guiding hand of an experienced accountant that will be able to help you at various steps along the way. The more complex your business goals, the more you need to bring in a professional.

Just about every business can benefit from hiring an accountant at least on a part time basis. If your business has moved on from being a hobby you run from your house into a full-fledged company, if you lack accountant experience and if you hope to expand your company in the future, look into hiring a professional accountant as soon as possible. Your business—and future income—will definitely benefit the moment that you bring in a knowledgeable professional to handle your finances.… Read More