For large organisations, the audit of the financial statements is part of life. By contrast, many SMEs are not required to bring in an auditor, and only a minority do so, in fact. Unknown is unloved, it would seem.
On striking observation is the difference between the auditor’s role and that of the bookkeeper or accountant is not always clear to those in charge of SMEs. ‘The auditor does not prepare balance sheets and financial statements himself, but acts as an independent expert to scrutinise that financial reporting,’ says Bart Roose, an auditor at VGD and statutory auditor to companies in various sectors.
The auditor thus checks whether the financial statements give a true and fair view of the business operations. To do so, he delves into the underlying administrative and financial processes of the company in question.
Bart Roose: ‘The audit provides an insight into the financial performance of the company (e.g. KPIs), but at the same time gives us an overall view of a number of processes with which the business manager himself only has intermittent contact during the year. If, for example, we come across a control that is not quite right, we will point out further adjustments and optimisations that may be appropriate.’
‘The audit gives us an overall view of a number of processes with which the business manager himself only has intermittent contact during the year.’
‘The auditor may act independently and impartially; he is and remains a sparring partner,’ emphasises Bart Roose. ‘That’s especially true in companies with which we have been working for a long time. Year after year we get to know their internal processes better. In addition, we gain experience in businesses of comparable size or with similar activities. This also helps us to pinpoint potential challenges faster.’
Finally, a plus point that is often underestimated by smaller organisations: the audit report is a quality label. Bart Roose: ‘From financial institutions to suppliers to potential business partners: financial statements that have been endorsed give peace of mind to every external stakeholder. They can be sure that they are dealing with a reliable party – the auditor is a guarantee of that.’
‘External stakeholders can be sure that they are dealing with a reliable party – the auditor is a guarantee of that.’
‘You project an image of greater confidence to your stakeholders and you get specialised expertise in-house’
In short, you project an image of greater confidence to your various stakeholders – the bank, customers, staff, investors, the government and so on. On top of that, as an SME entrepreneur you get specialised expertise that you can use to further optimise your operational and financial business processes. 'It's win-win for your business,' concludes Bart Roose.
Did you know that with 45 auditors and more than 500 audit assignments, VGD is one of Belgium’s largest audit players? Our audit experts have experience in all types of companies and non-profit organisations. They are supported by VGD specialists in the fields of tax, legal, environment, subsidies, VAT, HR and IT.