As a business owner, one of the necessary steps in ensuring your company is maintaining its visions, goals, and profit is through the process of auditing. By annually evaluating the company’s financial documents, an audit helps validate the company’s financial standing. In addition, it allows investors and shareholders to know the company’s current value.
In Singapore, under the Singapore Companies Act, all companies must have their financial and accounting records audited by a third-party auditor annually. In other words, unless the company meets the requirements for exemption, it must subject its financial records to scrutiny by an external auditor.
To ensure standards are maintained consistently during the auditing process, the Accounting and Corporate Regulatory Authority (ACRA) enforces audit laws for both companies and their auditors. Therefore, as expected, choosing the right audit firm plays a vital role in the integrity of the audit report.
Here are crucial points to keep in mind when hiring an audit firm.
Point to Keep In Mind When Hiring An Audit Firm
What’s Their Experience Level?
While there’s absolutely nothing wrong with engaging a newly incorporated audit firm (especially since everyone has to start from somewhere), it’s advisable to deal with an audit firm that understands the Singaporean business environment. In addition, it should understand the industry that your business is in. The auditing process would run more smoothly when dealing with an audit firm that understands the financial workings of your particular industry.
Apart from their industry-specific experience, another thing to consider is the quality of their portfolio or clientele. Experienced audit firms are more than ready to reveal companies they have worked within the past. This can be another indicator of their level of experience.
Professional qualifications and certifications
Under the Companies Act, the chosen audit firm must have the necessary professional qualifications and certifications. When in doubt, ask to see their government-approved certifications and qualifications.
Not only will this help in ensuring you get quality service, but it also guarantees that the audit report is acceptable to the Singaporean government. Having industry-based audit experience is one thing; being certified by the state is another.
Understanding Your Company’s Needs
The size of your company plays a crucial role in deciding the audit firm to hire. However, there are audit firms whose competency level varies greatly with the scale and scope of the business.
For instance, larger-sized companies (often referred to as top-tiers) have more complex financial and tax records to deal with than smaller sized companies. So, with that out of the way, what exactly do you need the audit firm to do in your company?
Auditing may be mandatory in Singapore, but you have to hire an audit firm whose area of specialisation coincides with your company’s current needs. Apart from independently auditing and validating your financial records, an audit firm can also help with financial advice on how to position your company for the next financial year.
Taxation is yet another aspect that can jeopardise the company’s financial position if not correctly done. Therefore, your chosen audit firm must have a proper understanding of taxation in Singapore. Such matters have to be handled within the guidelines and rules of the Inland Revenue Authority of Singapore (IRAS) and the International Register of Certificated Auditors (IRCA).
What is Your Budget?
Many of the financial woes of a business can arise through the misappropriation of funds and spending beyond the proper budget. The same is applicable when looking to hire an audit firm.
There are several international and homegrown audit firms in Singapore offering varied prices for their services. Without compromising on the quality of service, ensure your chosen audit firm can work within your set budget.
The scale and financial resources of companies can differ, and so should their budget for an audit. Top-rated audit firms may possess better experience and skills, but middle-level audit firms can also offer good services at a lower price.
The Auditing Process and Transparency
In today’s world, with advances in technology in all aspects of life, your chosen audit firm must incorporate the use of technology in the auditing process. As an example, using relevant software programs when auditing can reduce the risks of mistakes.
The firm should have the latest auditing software to ensure quick delivery of the report for submission. You would not want to subject your company’s financial records to a manual audit process that is more likely to have various mistakes.
The external auditor should also be transparent in evaluating your company records. Although they work independently from your company, they should be open to answering your questions regarding any part of the auditing process that may seem confusing to you.
Reputation and Referrals
In the end, it all boils down to the audit firm’s reputation. What exactly are people saying about them? It is possible to have an audit firm that can check all the boxes for their work yet has terrible customer service.
Just like excellence attracts a good following, a bad reputation often leads to a growing list of dissatisfied clients. While sometimes the fault is that of an auditor’s difficult client, the onus is on you to decide whether their clients are just being demanding or are actually dissatisfied with the auditing service rendered.
An excellent way to achieve this is through referrals. You may not be able to access the audited reports of past clients, but they should be able to tell you about their experience working with the audit firm. How likely are they to use the audit firm’s services again or place them on a retainer?
Conclusion
As an incorporated company in Singapore, there’s no escaping an audit. Unless you meet the requirements for an exemption, you’re mandated by law to submit your company’s financial records annually.
Since there are several benefits of auditing your company records anyway, it’s best you hire a reputable audit firm that can deliver exceptional services. In addition, when it comes to the valuation of your company, it’s good to note that the quality of work of an audit firm can actually make or break your company’s financial reputation.
Therefore, a lot has to be considered when looking to hire an audit firm. In the end, the chosen audit firm must not only deliver an independent, unbiased audit report but must also have transparency and a good working relationship with you.
