Gold Magazine February - March 2013, Issue 23 | Page 44

opinion

Making the Most
of the Unavoidable
Those annoying yearly audits
have hidden benefits

By
Viktoria
Soltesz

A

ll Cyprus companies are
obliged by law to submit
annual audited financial
statements. For many
of them, the process is
viewed as nothing more
than a costly obligation
and the real benefits (yes, there are some!) of
the audits frequently remain untapped. But
hefty audit fees can be considered a good
investment when they reveal things that can
be turned to a company’s advantage.
We all know how expensive audits can be,
not only in terms of money but also regarding
staff time and management attention. The primary goal of an audit is to express an opinion
on two aspects of the financial statements: that
they are fairly presented and in accordance
with International Financial Reporting Standards. But is that all they can do?
It would appear that for the majority of
Cypriot companies, all the benefits of the annual audit go to the banks, finance partners,
government agencies and, of course, the auditors who claim the not inconsiderable fees.
If we view the yearly audit routine as a chore
that has to be done and forgotten about,
we are certainly not getting the most out
of our costly investment. The question that
any company owner or CEO needs to ask is:
“Is anything there for me?” The answer is a
definite “Yes”.
The auditing process can determine
whether there are recurring deficiencies in
the way the company operates. Infrastructure
or structural problems, an unwillingness to
invest in a suitable accounting system or leaving important issues to inadequately trained
staff can all lead to the auditors requiring
more time and, by extension, higher fees for
their work. A lack of preparation or incorrect record keeping will distract the auditors’
attention from other important issues which
might actually benefit the company.

The company
should take
advantage of
the auditors’
un ique
and broad
perspective

Once the audit is finished, it is definitely
worth exploring what has been discovered on
the way to signing off the accounts. When
the findings show discrepancies, the thought
of taking steps to improve things often causes
management to break out in a cold sweat and
it is easy to delay or even ‘forget’ to implement what may be a long list of audit recommendations. No-one likes to admit their
weaknesses but failing to take action is no
solution. However, audits can provide much
more than the fulfillment of minimum legal
requirements and if managers, owners and/
or CEOs are willing to take note, the benefits
can be numerous.
An independent, external judgment of a
company can help improve its profitability
and efficiency by guiding management to
understand its financial systems. This will in
turn reassure managers, shareholders, suppliers and financers that risks are being monitored and (hopefully) properly handled. A
professional evaluation can also reduce costs
by addressing known risks.
The right questions may also uncover inaccuracies and discrepancies within the organisation’s records. Sometimes an outsider’s overview
is the only means of spotting weak points in
financial record-keeping or even the existence of
internal fraud, although fraud detection is not
the primary purpose of the yearly audit.
The company should take advantage of the
auditors’ unique and broad perspective in
order to evaluate and analyze the effectiveness
of its various processes.
All in all, it is easy to transform the annual
audit from enemy to friend. Once we recognize that its primary purpose is to benefit our
company or organisation and we implement
its recommendations, we shall be making our
own positive contribution to our own future
prospects. In today’s competitive environment, any advantage that can be gained is to
be welcomed.

info: Viktoria Soltesz is Head of the Accounts Department at Wolfgang Hastenrath Havariebureau (Cyprus).
42 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS