Whether it’s a big business or a small one, opting for an external audit company to review the financial operations of your business creates an extremely favorable position. In a financial reporting, the external auditors are actually the third parties that perform a completely independent review or an audit of the financial statements and records of the company. They take into account all the important financial records to form an opinion regarding the fairness of the monetary transactions of the company. You are going to find a lot of external auditors, but the question is which external audit company in Kenya you are going to choose? According to Section 159 of the Kenyan Companies Act, all the companies need to appoint an auditor annually. In this blog, we are going to offer you the 6 most important factors to remember before you appoint an external audit company in Kenya.
License and Certification: This is one of the key factors to consider before choosing an external audit company in Kenya. The external auditors should be licensed and it should not be limited to Certified Public Accountants (CPA) or just Chartered Accountants (CA). Along with this, the external audit company in Kenya must have accreditation from different organizations. It is even better if the external audit company in Kenya is accredited by International Accounting Standards for all enterprises. The more accredited an external audit company is, the more reliable it can be.
An Impartial Audit: A very important reason why you should hire an external audit company in Kenya is that you require an impartial analysis of your company’s financial statement. This is exactly why a certain level of independence to audit is absolutely essential. You shouldn’t hire an external auditor or an external audit company in Kenya with whom you have a personal relation. Any significant direct or indirect relation with the auditor can impair the auditor’s independence and your organization might end up having a partial audit of the financial statements.
Consider Your Business Type: Any organization needs to consider their business type before hiring an external audit company in Kenya. Selecting an external auditor, generally comprises of bids and tenders. The invitation for sending tenders needs to include a clear description of the organization and also the audit requirements. The details of your business type and its undertaking industry should be mentioned specifically. You need to specify the type of audit you are looking for and provide a clear description of the management, administrative process and internal control of the company.
Experience and Qualification: An external audit company in Kenya needs to have strong academic qualifications and years of experience in external audit. Being a business owner, it is important to consider the experience of the auditor along with the previous audits they performed for other companies. This will make it easy for the business owners to determine whether the experience of the external audit company in Kenya will be beneficial to the business of the company, it’s type and size. The academic qualifications and experience come in handy to select an external audit company in Kenya. For instance, if you have a manufacturing business, an external auditor who has experience to audit manufacturing firms, will be much more feasible than an auditor who is experienced in auditing banks and other financial institutions.
The Audit Fee: Before hiring an external audit company in Kenya, it is important to weigh the costs and benefits of the audit. The proposed audit fee must not be too cheap or too expensive. You need to be prepped for your desired budget and ensure that you negotiate a reasonable fee. Keep in mind the benefit you will get over the expenditure on the audit. If the auditor’s recommendations are followed, the financial condition of your business will improve and the internal control will become much more effective. This, in turn, will reduce the cost of the second-time audit.
Audit Reputation and Track records: Finally, this is extremely important before hiring an external audit company in Kenya. Any business organization needs to consider the integrity and reputation of the external auditor. Inquire how the external auditor has performed in their prior audit engagements. You should always opt for independent and high-quality audit services. Check out whether there are any legal obligations for the external audit company in Kenya that you are going to hire. A lot of audit firms face legal obligations due to audit failure. Make sure that the audit firm you are going to hire, is clear from any legal obligations. This is a direct evidence regarding the transparency and quality of work by the company. You can also ask for feedback and check out the reviews on their performance.
In real practice, it is very common for small business owners to opt for the lowest bidder among all the bidders. But it is mandatory to ensure high-quality audit and this is why you should opt for the right external audit company in Kenya. If you consider a fair price and technical qualifications, it is highly likely that you are going to get a high-qualified and experienced external auditor. To get top-class customized accounting services, financial advice, audit, tax affairs or any other financial services, you can get in touch with Ronalds & Associates.