Why should smaller companies invest in a voluntary audit?
A. Financial statements audits add value to a company. Smaller companies invest in audits for the same reasons as larger companies, but there are particular issues facing smaller companies that make investment in an audit worthwhile: • The cost of the audit is often marginal for very small companies, particularly where the auditor is involved in the preparation of the statutory accounts. • Small companies who prepare their own accounts often need help in arriving at adjustments, such as those for obsolete stocks, bad debts and other provisions • Small companies grow, and may find themselves subject to a statutory audit requirement – the first year and the subsequent years of an audit can be very trying if the accounts are not in good order • An audit is essential in financing negotiations, take-over and buy-out • The close involvement of the auditor provides companies with comfort when faced with tax and regulatory investigations Directors of smaller companies may believe, for example,
