Linda Penny, at Hounslow based Accountants Charles Stuart, provides audits to many business clients. Most companies with turnover of less than £5.6m do not now legally require an audit.  On the flip side those companies who remain above the audit threshold often view the audit as a "grudge buy" or a necessary evil that is hardly blessed at the outset. Linda’s view, however is different; she says the audit function, approached positively, can turn out to be beneficial.

A basic plus point of any audit is that it allows objective professionals to review the financial performance of the business. The key to making this information valuable is to work with the auditor to go beyond the minimum compliance function and use the audit to develop management information that challenges the business strategy and processes.

An auditor’s role, says Linda, is not that of just ticking check lists and producing historical information that is not really relevant to the business’s forward strategy. It’s about interpreting the information to help make fundamental commercial decisions on issues such as funding, risk minimisation and performance improvement. In addition the audit should be there to provide comfort to those companies who employ financial directors, as it will provide detailed information on the performance of those people.

A direct financial benefit of the audit can be the identification of unclaimed VAT, supplier overpayments and areas of capital allowances. In these instances the audit is acting as a company healthcheck rather than merely a report on the previous year’s activity.

So how should companies plan to get the best from their auditor each year? A good auditor, says Linda, will go beyond the numbers and challenge the business processes using management information derived as part of the audit. Communication is vital to this process, so if your auditor is not switched on in this respect you need to seek to develop the relationship. This means you are providing as much information as you can well in advance of the audit and throughout the year on an on-going basis, explaining what you want to achieve. For example, outline that you expect the audit to help improve business processes in areas such as customer care, IT and personnel management. With the implementation of IT in most firms, this should be an easier objective to achieve, as auditors can process the numbers more efficiently, enabling them to spend more time with you working at the heart of the business. It’s also important that you have a relationship with an auditor that understands your business and industry sector: one aspect that clients value in their professional advisers, is the in-depth knowledge of the sector in which they are operating.

Remember as well, that getting the best from a business owner/auditor relationship is about give and take. You need to be prepared, in advance, to give your auditor all the information they need to take a pro-active approach in their advice to you. The audit is a powerful tool once the information is pieced together. The easier this is to achieve, the more likely you are to have management information that is current and valuable.

For further information, please email value@csuk.com