In: Accounting
Mr. Amado Bunkers, CPA, Chief Accountant of Bunky Bunkers, Inc. and younger brother of President Bunkers argues that he is a CPA, that the accounting system and procedures of Bunkers are impeccable, and as such, there is no need and it will be a waste of money for an independent audit of the company. Do you agree with Mr. Bunkers? Explain in detail why you agree or disagree with Mr. Bunkers.
The goal of having audited financial statements independently certified is to try to ensure the financial information provided is an accurate, complete, and unbiased representation of the financial condition of the company under review.
Reliable financial information is essential to the following groups:
Credit professionals making decisions about credit granting,
Investors or potential investors considering whether to invest in the stocks or bonds issued by corporation
Bankers considering whether or not to sign off on a loan request
Government compliance. An external auditor can help identify areas where your books or accounting practices are no longer in compliance with new Internal Revenue Service regulations. An external audit can also pinpoint where your compliance efforts may be lacking
Credibility. Internally and externally, your financial statements will carry more weight if they’ve been vetted by an external auditor. For family businesses, closely held corporations and non-profits, these audits provide common ground for stakeholders to properly assess the financial health of the organization
Fraud Prevention. While it may be unpleasant to even think that someone could be defrauding your company, it’s better to know for sure than continually wonder. It’s impossible to spot a fraudster just by looking, and they often turn out to be the person least likely to arouse suspicion.
Process Improvement. Hopefully, your external audit will turn up nothing unusual. Even in this instance, however, an outside accountant might find areas where you could improve your internal controls or automate certain processes to be more streamlined.