We wanted to walk you through the process of obtaining audited financial statements, some of the benefits, and the costs entitled.
The audit process
The process of audit for your company's financial statement involve a detailed review of your financial records, various levels of analytical and substantive testing to obtain reasonable assurance that statements are in accordance in material respects with a financial reporting standards applicable for the entity. The process also includes a review and understanding of the company's internal controls over the financial reporting. The good news, if your business has strong internal controls the auditors can use a control reliance approach which will reduce the amount of the details testing which could build efficiency in the auditing process and reduce the costs of the audit as well in future years.
The process is involved and generally has 3 phases:
2) Field work
3) Draft financials, approval and issuance of audit report.
The benefits of an audit include the following:
- Provides credibility for your financial statements and confidence in the figures for your stakeholders including investors, shareholders, banks for lending requirements and other users of the financial statements.
- Helps detect errors in the financial results in the business. ASPE ( accounting standards for private enterprises) and IFRS ( international financial reporting standards) are the highest accounting and financial reporting standards in Canada and and audit by external auditors can help detect errors and correctly them and prevent them in the future as well.
- Limits legal liability and tax issues as well. As part of the audit process the external team reviews the legal issues and tax compliance matters. They review these matters in conjunction with the reporting of these issues in the financial statements. Also, since validating the financial statements for accuracy and completeness year over year, this can avoid triggering corporate tax audits and legal claims.
The cost of financial statement audit vary depending on the business and the nature of the financial reporting requirements. Generally for even small businesses the audit fees usually start in the several of thousands of dollars since the process is involved. For more information on the audit process or if you would like to get a quote, please contact an MP Group advisor at 416-214-0527 or visit www.mpgroupcpa.com.