Every business is unique. The purpose, product, service and scope of every business is different. But what’s the one thing all businesses, from big conglomerates to local businesses, have in common?

The threat of fraud.

Running a business involves the participation of many people, including employees, suppliers, agents, transporters, advertisers, customers and many more. And while your business may be your baby, not everyone is as passionate about it as you are. All businesses are susceptible to people who have bad intentions or who might be compelled for reasons of their own to commit thefts or other frauds. However, whatever their reasons, their actions ultimately affect your business adversely.

The best defence against such crimes is preventing them – or at least taking proper precautions that will make perpetrating such frauds difficult.

The most effective tool for preventing and detecting fraud in your business is an external audit. External audits are an unbiased, independent way of assessing a company’s financial health, organization, and documentation practices.

How External Auditor Can Save Your Business from Fraud

Here’s how an external audit can minimize any threats of fraud to your business:

Fraud Detection

• Inviting an external auditor to come and check your records can help detect any irregularities or discrepancies in your business documents. For instance, any mismatches in invoices and payments, missing receipts or bank records, or overcharging by suppliers and vendors will come to light during the audit. It can also be easier for whistleblowers to communicate suspicious activities to a neutral, unbiased auditor rather than an internal one.
• With the latest technology and audit software, an expert external auditor can analyze your business records more thoroughly than your internal team.
• An experienced external auditor is also adept at differentiating between deliberate deception attempts and accidental working lapses. This expertise helps them detect any prevalent fraud and guides you on how to ensure such incidents don’t happen again.
• An auditor can also help uncover conflict-of-interest scenarios that might hamper your business. For instance, if any of your vendors is directly related to any employee, it might cause a conflict of interest for the employee and affect their work and, in turn, the company. By studying your business in-depth, such potential stress causes can be sorted out immediately, thus reducing the risk of fraud.

Fraud Prevention

While external audits at regular intervals are a great way to detect fraud, they can also be an equally effective way to deter fraud from taking place in the first place!

• First and foremost, just the knowledge that an external audit will be conducted is enough for most fraudsters to desist from doing it. The fact that all financial documents, receipts, bank books, and even communication within the company are open to audit will discourage fraudsters as they will be afraid of exposure and the consequences of that exposure.
• Secondly, it helps plug any loopholes in your business regarding compliance, regulation or bookkeeping systems. Expert auditors can guide you in maintaining your business records and establishing compliant organizational systems to identify and track any anomalies immediately. They can suggest ways of enhancing your internal controls and audits to prevent even the possibility of fraud.
• Perhaps most importantly, the idea of an audit, especially an external audit, screams transparency, honesty, and accountability in the workplace. The thought that all your work will be scrutinized and cross-checked works wonders for encouraging employees and other associates to sincerely follow the company’s moral and ethical code of conduct.

All this being said, it is essential to remember that no business is ever completely free of the risk of fraud. While audits constitute a significant discouragement to fraud, there is no guarantee that fraud will not occur. However, audits – incredibly unbiased external audits by specialists – drastically reduce the level of risk and the possibility of any such incidents taking place.

Contact Edelkoort Smethurst CPAs LLP in Burlington to Help You with External Audits

A skilled auditor can help you perform a thorough audit of not just your financial statements but also the software, systems, and business processes and reduce the risk of fraud. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best accounting and audit expertise, contact us online by telephone at 905-517-2297 .