In order for national economies to have effective capital markets, many international accounting and auditing standards are enforced by governments. In the UK this is true and, for the time being, many such standards are incorporated into EU law, which provides audit directive and regulation across the country. There are many ways to tackle the auditing process with a lot of money behind the system. Adapting how your business goes about it could free up finances and create value.
Playing the system
In 2014 the LuxLeaks scandal that revealed around 300 companies with operations in Luxembourg had cut their bills by playing national tax systems against each other resulted in the forming of the Base Erosion Profit Shifting (BEPS). Its aim is to resolve disputes concerning the use of tax havens and origin definitions.
While this is in practice a positive move, RSM mentions that it could have a negative impact for growing businesses that essentially don’t have the resources to challenge any wrong decisions. Looking for tax havens to use should be avoided but there are other measures to adapt your auditing process and increase value.
Generally, auditing is a process that involves evaluating actions from the past and ensuring that compliance has been met. As the famous quote goes though: ‘those that fail to learn from history are doomed to repeat it.’ That’s why your business needs to use what it finds from internal and external audits to look forward.
Auditing forward means working with auditors to help develop any new processes and make sure everything is compliant. This should avoid experiencing issues further down the line which can take extra time, resource and finances to iron out. Working with auditors and developing legacy systems can make the whole process a lot more efficient and add value to both parties.
Pretty much every industry had adopted technology in at least some form and auditing is no different. Many financial reporting processes are implementing technology in a wide manner of ways and becoming more and more automated, meaning businesses will require appropriate resources and training to utilise them.
Auditing involves processing a lot of data and numbers, with analytics technology now allowing for 24/7 analysis of huge amounts of data. Speeding up the auditing process can save businesses a lot of time and money again, especially if they can invest in a program to do the work rather than paying an auditing company. As the auditing industry is based around strict rules and regulations, it makes it easier to apply technology to such roles.
Preparing for auditing forward links in with internal auditing, as this can be done to assess risk and create actions to take. In most cases you will need to bring in an external auditor anyway, but starting with someone internally can speed up the process and cut back on the money spent on their time.
The auditing industry is evolving as technology becomes even more important and regulation stricter. There are ways to still free up finances and boost the value of your business to go towards other investment opportunities and grow your company.