A business needs to constantly understand its financial standing so that it can perform better. In understanding the business, auditing can play a major role as it analyses the various activities of the business and helps the management in understanding who a particular activity can be made better. Let us understand what an Audit is and how can it help in increasing the profitability of a business.
What is an Audit?
In simple terms, an audit can be understood as the verification of all the financial data, various processes etc. of a business. It is an inspection of the various accounts of the business by an authority. This authority can be a third party or can be a department in the organization which is being audited.
Depending upon the nature, size and requirements of the business, an organization can opt from two different types, namely:
An internal audit can be understood as the examination of the internal controls of the business. This includes its management, accounting, etc. This is usually conducted by a separate department of the organisation of a person who is part of the organisation.
An External Audit is the examination of the records of the business by an external third party. This can be beneficial for the business because the chances of fraud are very less in this.
How Auditing can assist a Business to be more Profitable?
An audit can provide many benefits to a business. Some of them are explained below:
Auditing helps in preventing fraud in the Business
The process of Auditing comprises of going through the financial accounts of the business. This helps in understanding the business and also allows the management to understand if any fraudulent activity is taking place in the business. Depending on the skills of the auditor, a lot of information can be unearthed which will help in better management of the business activities.
Auditing helps management to understand the financial situation
Understanding the financial situation is a very important part of managing the business. Once an audit has been done, the business management has the required information about the organization which will help the business to stay on the path and become more profitable.
Auditing promotes good control measures in the business
Having control of the various internal measures of the organization is an achievement for the management. Auditing helps the management in maintaining better controls which will allow the business to become more effective, efficient and profitable.
Auditing helps increase Reputation
Sharing information about the company from time to time helps increase the transparency in a business. This will allow the investors of a company to make informed decisions and will also help in attracting more investors. This will also help the management to gather more funds so that the business has access to better resources and infrastructure. Auditing will also increase the goodwill of the business and will attract more and more investors.
Auditing improves the credit rating of the business
Auditing means the examination of the various reports of the business. As this will help combat the fraudulent activities and also increase goodwill, it will help the management in improving the credit rating of the business. With an improved credit rating, it will be possible for the company to arrange for more funds to use for the business.
These are five ways by which it is possible for auditing to help a business become more profitable and efficient. However, it is recommended that the management should utilize the services of a reputed Auditing firm that will understand your business and provide solutions to you accordingly.
If you are looking for such an auditing firm in the United Arab Emirates, then you must have a look at the services provided by JAXA Chartered Accountants. The various professional experts at JAXA aim to provide the best possible services to its clients and will ensure that the profitability of the business increases.
JAXA also provides other services to a business such as Accounting services and Bookkeeping services, VAT and Tax related services, Payroll services and many other services. To know more about the services provided by JAXA, feel free to Contact Us. We will be happy to help.