Australia remains one of the most business-friendly environments in the world. Many companies expand or move to Australia to take advantage of the stable conditions and favourable business laws that allow local corporations to flourish. That stability is partially due to strong corporate governance and regulatory bodies. By ensuring that a majority of businesses are operating legally and ethically, Australian regulators are able to create a more productive climate. Auditors play a major role in maintaining the regulations that allow our businesses to thrive. As third party operators, auditors are able to provide accurate and unbiased financial assessments that help strengthen companies and power their future. The role of auditors can take many shapes, and we will cover their most common functions in this article.
Represent Shareholder’s Interests
One of the most important functions of an auditor is to represent the interests of shareholders. External auditors operate outside of the company’s influence, putting them in a unique position that allows them to think first of shareholders or other stakeholders.
A major part of an auditor’s work is to review a company’s accounting procedures and provide reliable financial information to the board and to regulatory bodies. Financial records can be used to determine which parts of a business are operating properly and which are not, and find any sources of misinformation that could be harmful to shareholders and the company. Without pressure from inside the business to overlook irregularities, auditors can deliver the clearest picture of a company’s operations and how shareholders are affected.
Manage Business Risk
Auditors are commonly involved in helping businesses assess and manage their risks and exposure. Corporations that leave themselves open to unlawful behaviours like fraud and corruption are more likely to run afoul of regulators and to be blindsided by preventable issues. Auditors can review security measures and policies before making their own recommendations for ways a business can mitigate risks and increase a company’s risk tolerance. For example, an auditor could suggest policies that allow employees to report fraudulent behaviour without fear of internal repercussions. By introducing external risk management checks, auditors can encourage management to take up their own risk assessment and management policies, ultimately building a stronger company.
Introduce Accountability Measures
Building accountability from within an organisation can be difficult. Pressure to maintain the status quo or follow the example of company officers often lowers transparency and increases instances of dishonesty. While auditors cannot take a direct hand in shaping accountability policies for a company, they may be able to develop and suggest positive changes that can be made. For example, auditors could recommend measures such as introducing penalties for managers and officers who manipulate or inflate financial records. Penalties might include things like termination, demotion or reducing compensation. Building strong accountability policies gives businesses the chance to improve their overall performance, strengthen relationships with regulators and avoid preventable losses.
Build Relationships with Regulators
Australia’s strong regulatory system makes the country an attractive option for many businesses. Operating here is made simpler by understanding and complying with regulations and holding strong relationships with regulators. Auditors can help companies develop transparent operations and earn the trust of regulatory assessors. Because auditors operate outside of a company’s structure, their reports and findings are also more likely to be trusted by regulators. Ordering a company audit is an excellent way to both improve productivity and show assessors that you are interested in complying with regulatory requirements.
Ensure Your Business is Compliant With Help From Australian Corporate Governance!
Australian businesses enjoy one of the world’s most favourable corporate environments. A strong rule of law and economy make Australian markets lucrative, but taking advantage of the opportunity requires businesses to become compliant and stay that way. Australian Corporate Governance has built a network of auditors and consultants with the skills and expertise to ensure your business complies with regulatory requirements, now and into the future. Whether you need an audit from the ground up or simply want help managing regulatory changes, we can connect you with skilled industry professionals. Speak to us today for more information on our corporate auditing services.