Ask people what top three things come out of their mind when doing business and you’d most probably get answers specific to money/capital, office space, and marketing strategy. You never get to see how other important, but not as prominent, processes take the spotlight. Take for example: taxation and auditing.
These are equally important business processes that if done correctly can spell the difference between a successful business and one that is doomed to fail.
So why not just put your focus on finances and marketing when doing business? Consider these reasons why you MUST perform auditing.
You see, this list may go on and on for eternity and you start thinking: if auditing is so essential, why isn’t it that popular? Consider the lack of information drives and viral dissemination. The public is not generally aware of it and not much effort is given by proper authorities in the Philippines for it to be understood well, even by laymen. Auditing then became the sole playground of accounting students and auditing professionals in service.
This article wants to bridge that gap, whether you’re just an interested citizen, an auditor from Davao or some other key cities and a business owner yourself. It pays to know.
1) For private entities
2) For government offices
3) Issues that beset it
Davao City is one large chunk off the map of Davao del Sur and it stands on its own, away from the whole province and region but despite that fact, it is still the premier destination of businesses both born from within and without.
In simpler terms: business is booming in the city of Davao, that’s a fact. This is further proven by teeming start-ups, franchises and even extension branches in the place. If you’ve taken this write-up’s opening statements with a closer look, you’d easily connect auditing to a situation wherein much business is happening. So how exactly can private entities make advantage of auditing services?
Davao auditors can make:
Financial advice – this is especially important when you’re a start-up. After a year in business, your auditor can tell you different advice regarding how to effectively manage finances, if ever you had more losses and help you on taxation solutions. Audits may also point out what are your company’s weak points in terms of financing and helps you focus on that problem.
Lending – when you already have a certified copy of an auditor’s account, true and fraud free, the hassle is lessened if you want to make some loans. Lending companies completely trust accounts (usually done by an external auditor) to approve your loan requests. This can also make your credit ratings high.
Frauds – since auditors usually work after a financial calendar or before a year ends, they can easily track down who among your employers are behaving correctly in terms of finances. They can easily discover it by asking questions and digging through your past financial records. Any inconsistencies can surface up and what’s more; they can pinpoint who’s at fault. This makes the playing field fair and level for everyone and for your company to make guilty persons held liable after the laws of the land.
Efficiency – of the workforce is highlighted. Audits do this by ensuring that training is fit for a certain employee. Audits may also affect the implementation of certain policies that is in the end, beneficial for every employee concerned.
Planning – for future endeavors becomes more vivid. When accounts are done carefully, the auditor can help your company shape its future in an upward scale. Facts and figures that have been compiled can be used to prepare budget and project estimates especially for income statement and sales for the upcoming years.
Just as private companies are abundant in Davao; it is also the center of government agencies in the region. The government agency that should have been tasked to bridge information gaps between the normal citizens and the knowledge of auditing are: Philippine Information Agency (PIA) and Commission on Audit (COA), but you never see them do so. No more finger pointing here, but at least COA is doing its share of the pie in supreme auditing in the land (that’s how they define their institution).
Audits by the government can:
Better performance – since government auditors are required to frequently check financial reports and status of every department, commission and agency, they can help chief executives and financial officers to direct more effort into increasing internal control. This will ensure that aside from inside control, external services that are expected of the leading government offices are delivered on time and efficiently to its constituents.
Exact – agencies involving revenues can be helped by not overcharging or its counterpart, avoid losses. Keeping in mind the main thrust by which auditors must perform: to maintain a balance. This is also beneficial to taxpayers since they know they’d not get cheated by revenue amounts.
Economy – and since effective revenues are strictly adhered to, this will reflect in the over-all financial wellness, not just of Davao but of the country’s economy.
Proactive – the Filipino people in general, know of corruption more than any nation in the world, it has even beset the country’s economy in a downward spiral for decades. Balanced auditing without any “padrino” system in mind can lessen frauds more than ever. Cheaters who overspend or spend the public’s money for personal reasons must be held punishable to the fullest extent of the laws.
Privatization – an auditor’s account can help determine whether or not a certain government office already needs to be privatized due to the losses that it is incurring or if the national budget cannot anymore take the responsibility of running it.
Nothing’s unflawed, and so is the process of auditing. And due to this general quality of imperfection, here are some issues that the country is facing when it comes to auditing.
Fees – they say good service comes with a price and since for private businesses, external audit is what the law prescribes, paying for fees is inevitable. This is usually 5 percent of the company sales. Considering the good effects of a successful audit, the price becomes absolutely worth it.
Time-consuming – your employees will know that an active audit is taking place when they see unnamed persons roaming around, asking questions pertinent to the balancing of financial statements of the whole company. This may take a lot of time to accomplish, something not very attractive to begin with. But within a certain time period wherein inquiries happen, this only happens once in awhile but the consequences at stake are really great for the business.
Prone to manipulation – in a world when just about anything can be fabricated, raw results are no exception. When external auditors see manipulated figures, they may not be able to do something about it anymore. The good thing is, the law mandates every private entity to have an external auditor handy.
CONCLUSION: Now you know that auditing can do wonders in a lot of aspect concerning your business and the entire economy, why not consider the prospect of asking a Davao auditor out for a business meeting sometime in the near future?