All business owners can agree that their company’s finances are one of the most important operations that help keep their business running. With that being said, dealing with finances can be incredibly challenging but still necessary to ensure you provide an accurate record of your financial health—that’s where an audited financial report comes in.
An audit is used to obtain an independent opinion on the financial report of a company or organisation. This information will boost the credibility of the information provided and improve confidence for intended users of the financial reports. Besides that, an audit will have to be presented per accepted accounting principles, and because of this, working with an experienced accountant is a must.
In addition to boosting your credibility and user confidence, audits also promote consistency and objectivity in financial reports, presenting your company as true and fair. To that end, when are audits required?
When are Audited Financial Reports Required?
When You Have a Charity or Non-Profit Organisation…
For charities and non-profit organisations with revenue under the review or audit thresholds don’t need to submit the Annual Information Statement. Note that you’re not required to provide financial statements to the ACNC. However, it is highly recommended that you consider your constitutional requirements, which may require reporting obligations to members.
When You Have a Large Company…
When your company evolves to a large proprietorship, your business must be audited under the Corporations Act. To know if your company falls under a large proprietary company is if, at the end of the financial year, your company meets the following criteria:
- You have a consolidated revenue of &50 million or more;
- You have consolidated gross assets of $25 million or more;
- You have 100 or more employees;
When You Have a Small Company…
Usually, small proprietary companies aren’t required to prepare a financial report. However, if the ASIC or shareholders require a report, then you must comply. But seeing as this is a case-by-case basis, you must work with a credibly accountant to ensure that your finances are on track and if you’ll be requiring a financial audit.
Why Do You Need a Financial Audit?
- Companies, organisations, or charities seeking to obtain a grant, investment, or external funding may have to undertake an audit. This is because this may be part of qualifying criteria that will satisfy the provisions of the grant;
- Some lenders may ask companies to provide audited financial reports if your business would qualify for a loan or satisfy loan requirements.
- In some cases, businesses would like to change ownership or sell their company; because of this, a buyer may require a financial report to see the true value of your business.
- Some companies and organisations may need an audit specified for the constitution, rules or other documents. Because of this, you’ll need to work with a credible accountant and auditor to create a financial report.
The Bottom Line: Audited Financial Reports are a Crucial Part of Any Organisation or Company
Seeing as audited financial reports are a huge requirement for some organisations, to stay compliant, you must work with a trusted accountant and auditor to ensure that your financial reports stay accurate. Otherwise, you may be dealing with a plethora of financial-related issues that may impact your company.
How Can We Help You?
There’s no denying that financial audits or reports can be incredibly overwhelming for some businesses. Thankfully, SMB Accounting has a team of highly skilled accountants who are equipped for this job.
Our accounting firm offers various financial services like individual tax returns, accounting for small businesses, self-managed super fund audits and more. If you’re looking for a reliable accountant in Caloundra to help you run your business, reach out to us today!