The benefits of an audit performed by an approved company’s auditor

The benefits of an audit performed by an approved company’s auditor 

(i.e. the appointed statutory external auditor):

1. Credibility of financial statements

• The auditor gives an independent opinion on whether the financial statements are true and fair.
• This makes the accounts more reliable to shareholders, lenders, regulators, and potential investors.

2. Improved confidence for shareholders

• Shareholders are not involved in daily operations, so they rely on audited accounts to know whether management is reporting honestly and not hiding losses or liabilities.
• This helps reduce the “information gap” between management and owners.

3. Better access to financing

• Banks and other creditors are more willing to give loans (or give better terms) when the company’s financial statements have been audited, because the numbers have been independently verified.

4. Stronger internal controls and compliance

• During the audit, weaknesses in internal controls (e.g. poor segregation of duties, weak approval process) are often identified and communicated to directors so they can improve governance and reduce fraud risk.

5. Detection and deterrence of fraud / errors

• An approved auditor performs tests, reviews records, and challenges management.
• This makes it harder for intentional manipulation to go unnoticed and also helps catch unintentional mistakes.

6. Directors’ accountability

• Directors know that the auditor will review their judgments (impairment, provisions, revenue recognition, etc.).
• This encourages directors to act responsibly and follow accounting standards, because they can be questioned.

7. Legal and regulatory confidence

• For companies that are required by law to appoint an approved auditor, completion of a proper audit shows compliance with statutory requirements.
• This can reduce the risk of penalties or legal disputes on financial reporting.

8. Better decision-making for management

• Management also benefits: audit findings (management letter points) can highlight inefficiencies, stock control issues, cash leakage, etc., which helps them run the business more effectively.

In short:

• Credibility
• Assurance to shareholders
• Easier financing
• Stronger controls
• Fraud/error deterrence
• Legal compliance
• Better management decisions