There is a reason why the Malaysian government is quite strict in enforcing mandatory auditing. For one, it prevents tax tempering and unlawful business operations. But that’s not all. By enforcing strict financial audits, auditors can check the accuracy of financial reports and promote the integrity of financial statements submitted by every business.
While it’s clear how financial audit services benefit the nation, it’s not so evident how these services benefit your company on a much smaller scale. So, to give you a better idea, take a look at how your company can improve with the help of financial auditing.
They Assess Risks
The appointed auditor must understand every aspect of your business to assess your financial statements accordingly. In this sense, the auditor’s role is to compare your business activities to your financial statements and judge whether they’re aligned or mismatched. Through this, the auditor can ensure that no fraud occurs due to human error that might affect the buyers’ purchasing decisions.
They Comply with Statutory Laws
When assessing the financial statements and books of accounts, the auditor also checks if it complies with the statutory requirements.
Every licensed auditor is knowledgeable about the industry’s standards and regulations, so they can easily verify the statutory compliance of your organisation. In doing this, your appointed auditor can prevent you from getting penalised due to non-compliance.
In Malaysia, private limited companies are fined up to RM 2,000 for late submission of financial records. Non-submission of audited financial records, on the other hand, can lead to a RM 30,000 fine or five-year imprisonment.
They Consolidate Documents without Bias
Another perk auditing services offer your business is that they consolidate corporate documents and evaluate precision without bias. The documents include the following:
- Director’s report
- Principal business activities
- Financial statements
- Director’s statements regarding the financial statements
- Total paid capital
- Financial manager’s statutory declaration
Upon consolidating all the documents and verifying their accuracy, the auditor will prepare an auditor’s report. This will contain all the auditor’s observations about the company and insights for improvement. Because the appointed auditor is an outsider, they can provide an objective assessment to help your company grow.
They Evaluate Operational Efficiency
Because the auditor is given full access to every aspect of your company, they can evaluate the efficiency of your business operations. Additionally, they can determine which areas are strong and which areas need improvement to enhance your financial performance with their expertise. Their responsibility, therefore, is to help you set a benchmark by which to measure the performance of every aspect of your business, from the managerial level to the basic administrative component.
With this benchmark in place, you can determine your business and financial objectives and align your decisions to achieve them.
They Lead Good Corporate Governance
Through their apparent power to enhance businesses in Malaysia, auditors have the ability to lead good corporate governance in Malaysia.
Good corporate governance is essentially a set of rules or processes that dictates how every business is operated, regulated, and controlled. The concept encompasses a wide range of internal and external factors that impact the company’s stakeholders, including the directors, shareholders, customers, government, and suppliers.
One key area vital for the country’s future sustainability is tax transparency, administration, and governance. The Malaysian Institute of Accountants believes that stronger tax compliance and governance are essential to improve overall tax collection and, thereby, finance the country’s future plans. These include financing the country’s stimulus packages, talent upskilling, digital transformation, and sustainable development initiatives.
In addition, the auditor’s expertise and special skill set can fight corruption that threatens the nation’s development. Due to the nature of their profession, auditors must uphold a specific code of ethics in relation to integrity, accountability, and trust. These core values, in turn, can be implemented into every business operation to prevent fraud and corruption.
Likewise, auditors can influence well-informed business decisions that not only benefit the business itself but, more importantly, the nation as a whole.
With all these, it’s clear that audit services play a key role in promoting financial integrity and ensuring future sustainability. As a result, they overcome financial challenges, prevent corruption, and safeguard the company’s and the nation’s prosperity.