One important service, which Small and
Medium Enterprise (SMEs) have failed to utilize effectively to improve their bottom
lines and increase business value to scale, is Audit service. This is echoed by
Alan W. Anderson the president of ACCOUN-ability Plus in his article The Goal of the Audit where he sighted a survey conducted
by KPMG of 200 small to medium-sized companies which found, that 56% of
respondents saw the normal audit as a routine chore that varied little from
year to year and, over 60% of the companies said their auditor did not raise
any issues or ideas that were used in their business to enhance their
processes or decisions.
SMEs make up close to 90% of businesses
anywhere in the world economies and are responsible for providing employment to
close to 90% of the people actively employed. That said, SMEs in Uganda
especially continue to struggle with governance, management, manufacturing/production
and growth challenges with dire consequences.
An
Audit engagement process, can result into an array of opportunities to improve
processes in management, corporate governance and strategy in areas such as
product innovation, customer satisfaction and care, innovative management
methods to sustain revenue growths through customer acquisition and retention
strategies, general administrations, manufacturing/production, asset management
as well as financing and investment opportunities.
Expand audit need
To
realize this value, seen as solutions to the fore mentioned bottom lines,
entities especially SMEs, will have to expand their Audit needs beyond
the traditional Audit which centers around Assurance,
fraud detection and compliancy assessments to include,
aspects of advisory audit such as, reviews of, governance and various
business processes, and also benchmark these, against best industry practices with
a view to add value.
Value in Audit
Why
traditional Audit is not helping SMEs, is because the primary concern for a small
business is not assurance or fraud. These operate less complex systems, that
make it easy to detected fraud and the compliancy demands for SMEs are
extremely low. This therefore means, an SME’s primary interest in audit, should
be to seek for opportunities to scale their businesses or enterprises by
undertaking an Audit, that offers more than what, traditional Audit
offers.
Since
2011, the IFAC Global SMP Survey has helped to raise awareness about the
challenges and opportunities faced by SMEs globally. Its 2016 survey results,
revealed an increased demand for non-assurance/related services by SMEs. Audit
firms, have in response to these demands, upgraded their audit service lines so
that, they can offer more value.
Whereas
these innovations have been made by Audit professionals, SMEs still continue to
request for the traditional Audit service as seen in the numerous tender
request for Audit service.
SMEs need skills
To
undertake the kind of Audit being proposed in this article, SMEs need to
acquire special skills set to ensure an equivocal input. These skill shall
enable them perform prior self-assessments before engaging an Auditor. This would
include, identifying and risk profiling crucial business processes and suggest
ways of how they want the issues to be tackled in form of a preferred audit
methodology, present them in a communication to potential Auditors in terms of
reference, select the best match Auditor and proactively follow through the
engagement to implementation of recommendations.
Such
an Audit is crucial, for an enterprise to not only survive, but also avoid
stagnation.
Matching the auditor with the identified
Audit needs is very critical; this is because, auditors vary in terms of
experience and interest. Auditors have often branded themselves, by choosing to
specialize in particular industries or business process and, are therefore more
cut out to deliver the greatest value to SMEs if well matched with the
enterprise’s Audit needs. An SME who has put in skillful effort to determine
its audit needs, has greater chance to select an Auditor who will raise issues and ideas that can be used in their business
to enhance their processes or decisions.
Auditors are trained professionals who do
not impose their will on clients. They therefore, can only go as afar into the
client’s affairs as the client can allow them. SMEs should seek training that focuses on improving their
technical input-capability on key areas of an audit process namely; the pre-engagement,
engagement and the post audit which require its keen participation to ensure
its maximum productive input.
These trainings are short corporate courses ranging between two to three days depending on the needs assessments of participants or
organization. One does not require any particular academic back ground to
benefit; just the mind to want to learn how to improve things.
The
write is a Trainer and a Senior Audit consultant with Omony Consulting Co. Ltd
jwauditors@gmail.com
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