Financial audits are a critical part of running a successful business in the Philippines. They involve a comprehensive examination of your financial records and transactions to ensure accuracy and compliance with accounting standards. Financial audits are ideally conducted annually to provide a clear and accurate picture of your small business's financial health. Carried out by an auditor, this process includes verifying the transactions that your SME participated in, checking your online business banking accounts, and assessing the effectiveness of the internal controls you’ve implemented.
After gathering sufficient evidence, the auditor analyzes the findings and prepares an audit report, which includes an opinion on the accuracy and fairness of the financial statements. This report is then presented to the business’s management and stakeholders, providing assurance that the financial records are reliable and compliant with relevant standards. It can be a time-consuming process, but carrying out regular financial audits offers your business several advantages, including the following:
Ensuring Accuracy and Integrity of Financial Records
Regular financial audits help ensure that your financial records are accurate and complete enough to serve as the basis of your business decisions. You need reliable financial records to accurately track income, expenses, and profitability and to acquire a true picture of your company’s financial health. Audits help identify discrepancies or errors in your financial statements, which is a crucial aspect of maintaining the integrity of your financial information.
Complying with Laws and Regulations
It’s essential for businesses of all sizes to remain compliant with the laws and regulations that govern enterprises in the Philippines. Conducting regular audits ensures that your business operates in accordance with relevant financial regulations and standards set by agencies like the Bureau of Internal Revenue (BIR), Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), or the Philippine Economic Zone Authority (PEZA).
Carrying out regular audits reduces your chances of incurring penalties, fines, or legal action due to non-compliance, all of which can lead to losses and damage to your business’s reputation. By conducting regular audits, you stay up-to-date with changes in regulations and remain aligned with financial practices and legal requirements.
Preventing and Detecting Fraud
Being involved in cases of fraud can have devastating effects on your business, especially when your customers’ personal or financial information are involved. Conducting regular financial audits is an effective tool for preventing and detecting fraud. This is because auditors are in the perfect position to identify unusual transactions or inconsistencies in financial records.
They can, for one, check on your business banking online account to ensure that all financial transactions and movements are accounted for. By regularly reviewing your financial processes and controls, auditors can help deter employees or external parties from engaging in fraudulent activities. This, consequently, protects your business from potential financial or reputational losses.
Improving Financial Management
Regular audits provide insights into your financial practices and help identify areas for improvement. By evaluating your financial processes and controls, auditors can highlight inefficiencies or weaknesses that need to be addressed. This is a necessary first step toward building better financial management practices and processes that efficiently use resources and improve your small business’s overall financial performance.
Enhancing Credibility and Trust
Conducting regular financial audits enhances your small business’s credibility and trustworthiness. Stakeholders, including customers, business partners, vendors, investors, and creditors view financial statements as reliable resources. Thus, presenting financial audits to them can improve your ability to secure financing, attract investors, and build stronger relationships with clients and suppliers. A reputation for financial transparency and reliability can significantly boost your business’s image and help you gain a competitive edge in the market.
Facilitating Strategic Planning
Accurate financial information is key to setting realistic goals and developing strategies that drive your business forward. Audits help you identify trends and patterns in your financial data, enabling you to plan for future growth and navigate potential challenges more effectively. By understanding your financial position and performance, you can make more informed decisions about investments, expansions, and other strategic initiatives.
Improving Internal Controls
Strong internal controls are essential for safeguarding your business’s assets. These are key to ensuring the accuracy of financial reporting and preventing fraud. Part of the auditing process is assessing the effectiveness of your internal controls and identifying areas where they can be strengthened.
For instance, your auditor might suggest that you switch to a trusted business banking services provider to improve the security of your financial resources and transactions. Using Maya Business Deposit allows you to benefit from top-notch security protocols while giving you higher-than-average interest rates. By prompting you to make the necessary changes to improve your internal controls, audits help create a more robust financial management system. This, in turn, helps reduce the risk of errors and enhance your enterprise’s overall operational efficiency and integrity.
Enhance Your Internal Financial Controls by Partnering with Maya Business
Sign up for Maya Business to enjoy a greater level of security and convenience while managing your small enterprise’s finances. By choosing us as your financial partner, you’ll be able to open a Maya Business Deposit account and use it as your settlement account. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit. This will also enable you to send money to your partners and suppliers for free via InstaPay and PESONet, letting you reduce overhead costs.
Signing up also qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months, which you can use as a resource to further develop your business. Just use Maya as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be.
Sign up for Maya Business today and enjoy the benefits of secure and convenient banking that matches the exact needs of small businesses in the Philippines.
