Why Audits are Necessary for Large Multinational Corporations: While there’s a tendency to believe that multinational corporations rule the world, these companies remain in a huge minority in the UK.
According to 2017’s figures, for example, small and medium-sized firms accounted for a staggering 99.9% of the private sector, meaning that just 0.1% were classed as large corporations.
Despite this, multinational corporations generate huge amounts of income per annum and continue to provide 40% of all employment in the UK. As a result of this, it’s imperative that these firms safeguard themselves and the individuals who they employ, and performing internal audits is central to achieving these objectives.
Here’s why:
- Internal Audits Help to Track your Spending and Assets
As a large business, you’re likely to hold numerous assets at any given time, with your capital split between various currencies, stock and external investments depending on your precise circumstances.
An audit is the objective inspection and evaluation of these assets, and this process can be used to track your businesses spending in intricate detail and calculate the cumulative value of the assets that it holds.
With this in mind, multinational firms can clearly use internal and proactive audits to capture a snapshot of their spending and assets, highlighting any inefficiencies or inaccuracies in the process. These can then be resolved quickly and effectively, potentially saving money simultaneously.
- Internal Audits Prepare you for Inspection from HMRC
When you hear the term audit, your mind will most likely be drawn to the external processed conducted by HMRC. These are random and undertaken at the end of each financial year, while they evaluate your accounts and reporting process to ensure compliance.
In this respect, performing frequent and internal audits helps you to prepare for this type of forensic inspection in an extremely efficient manner. Service providers like RSM will even help to provide a completely objective audit into your finances, highlighting any potential issues or discrepancies before you’re required to present your accounts to HMRC.
- Internal Audits Prevent Non-compliance and Huge Fines
If we expand on the last point further, we see how internal auditing can help to guarantee compliance with HMRC. This means that you’ll pay the right amount of tax in accordance with your circumstances, while also presenting your accounts in an efficient and easy to understand way.
Ultimately, this will negate the risk of non-compliance and its various sanctions, which can include huge fines and penalties in addition to the subsequent repayment of your outstanding tax bill.
This safeguards the long-term future of your multinational corporation, and the hundreds (or thousands) of people who work for you and rely on their job as a viable source of income.
