Auditing specifically refers to the act of reviewing finances and records to verify the accuracy of financial statements, inventory, tax documents or some other aspect of a business’s operations. It may also be used to determine the value or locations of assets. It can be done in a legal investigatory context, as a quality assurance measure or as a safeguard against mistakes and fraud.
Consulting entails analyzing a business, identifying an issue and providing solutions. Consulting on financial matters is just one operational aspect of a business a consultant may evaluate.
Not every business will always need or benefit from auditing. It’s often specifically performed to investigate alleged or suspected fraud or for the purposes of fraud detection or deterrence. Auditing may also be necessary if a business has had historically poor accounting practices. Auditors are often tasked with checking existing financial documents against actual funds and assets to confirm everything is accurate and legal.
Auditors and consultants have different skillsets. Auditors generally have backgrounds in finance and forensic accounting. They need to be intimately familiar with all types of balance sheets, financial documents and financing methods. An auditor must be able to track revenue, expenses, real property or any other assets and records across many different types of financial institutions and piece together a full and accurate picture of a company’s financials.
Consultants may have more specialized knowledge in certain aspects of running a business, but in many cases business consultants have broad experience in things like management, finances, accounting and human resources.
Both consultants and auditors are frequently Certified Public Accountants (CPAs) or have backgrounds in accounting, because being able to analyze all types of financial statements is often necessary for both professions.
Where auditors tend to focus on getting an accurate picture of a business’s financial situation, consultants are generally tasked with developing solutions to existing problems or improving specific aspects of a business’s operations.
For example, at H&H Accounting Services our business consulting services include things like financial analysis and developing and implementing accounting practices, both of which are related to auditing.
In addition to those services, we can also help with things like choosing an employee benefits plan, forecasting growth, developing risk management strategies and assisting with tax planning.
Cashflow is a significant struggle for many SMBs, especially right now. A business consultant can help you better manage cashflow and identify ways in which you can make your capital go further without needing to increase revenue.
Businesses might also hire a CPA like H&H Accounting Services before a merger or acquisition. A business consultant can help plan, double check the legality of every aspect of the merger, identify business redundancies and analyze each entity’s separate financials.
In short, both auditors and business consultants have their uses, but auditors tend to have a narrower focus on statements, bank accounts and financing, while business consultants can potentially advise on virtually every aspect of a business.
Not every business needs a business consultant or auditor all the time, but most SMBs can benefit from working with a consultant at some point, especially when attempting to overcome specific challenges.
Economic downturns, unexpected supply or demand disruptions in your industry or challenges caused by internal or external factors can throw hurdles in your business’s way. The COVID-19 pandemic was a perfect example.
Investing in a business consultant may help your Phoenix small business weather difficult times or unique situations.
The simple answer is yes. More than any other business investment you make, having a bookkeeper, accountant and business tax preparer is likely the best way to prevent audits.
Audits generally aren’t desirable. They’re usually only necessary when something needs to be investigated, like discrepancies in your assets or IRS suspicions that your business isn’t paying its fair share of federal taxes.
Working with a Phoenix accountant and tax preparer like H&H Accounting Services is one of the most reliable ways to prevent time consuming and costly audits. When combined, our bookkeeping, accounting and tax preparation services make it easy for business owners to maintain maximum visibility into their company’s finances. It also makes business taxes far easier to manage.
You can schedule a free one-hour consultation with our team by calling (480) 561-5805. We’d be happy to come to you.
