We are super excited to welcome our auditing extraordinaire, Adam Brown into the fold. Adam completes our full service structure at 542 Partners and leaves no stone unturned to get under the skin of our clients businesses.
Most business owners cringe at the thought of an audit but audits are actually a great thing! Most people think of the ATO when they think of audits, but actually the ATO don’t get to have all the fun. There are a range of audits that help, not hinder your business activity.
Types of business audits
External audit, also known as financial audit and statutory audit, involves the examination of the truth and fairness of the financial statements of an entity by an external auditor who is independent of the organization. Company law in Australia requires external audit on annual basis for companies who satisfy two out of the following 3 criteria:
- Greater than $25 Million in turnover
- Greater than $12.5 Million gross assets
- Great than 50 employees
External audits provide assurance that that financial statements, as reported by the directors, are all AOK.
Unlike external audit, the scope of work of an internal audit is very broad and can include anything that affects the performance of the business. Internal audit is typically based on key areas of the business, such as:
- Monitoring the effectiveness of internal controls and proposing improvements
- Investigating instances of fraud and theft
- Monitoring compliance with laws and regulations
- Reviewing and verifying where necessary the financial and operating information
- Evaluating risk management policies and procedures of the company
- Examining the effectiveness, efficiency and economy of operations and processes
These audits are usually conducted for management and directed toward those areas requiring review.
Forensic Audit involves the use of auditing situations that may involve legal implications. Forensic audits may be required in the following instances:
- Fraud investigations involving misappropriation of funds, money laundering, tax evasion and insider trading
- Determination of the profit share of business partners in case of a dispute
- Findings of a forensic audit could be used in the court of law as expert opinion on financial matters.
This is where the ATO has their fun. Tax audits are conducted by the tax office for those identified as presenting a tax risk. They assess the accuracy of the tax returns filed and are used to determine the amount of any over or under assessment of tax liability.
Trust account audit
Trust account audits are usually conducted for Real Estate Agents, Solicitors and Accountants. The purpose of these audits are to ensure that money held on trust for 3rd parties has been recorded and allocated correctly.
Think you need an audit? Talk to us to arrange a consultation.
Or check out our website for more information.
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