More is Less
This represents the effect of smaller, more regular audits. All the small audits add up in the long run by "eating" the big problem. http://en.blog.zyncro.com/2011/09/02/less-is-more-or-more-is-less-in-life-at-work-and-in-software/.
Companies dread audits and hope that they only happen occasionally. For some companies, they occur sporadically and spontaneously throughout the year. For others, they might happen at certain times each year, such as prior to the end of the year. All companies can agree that audits should happen as little as possible. No one likes someone breathing down his or her neck at all times. However, smaller, more regular audits prove beneficial to a company in the long run. In the article titled “An Audit Could Save A Firm”, Martin Daks claims that an audit can detect small, menial issues that could later spur into large issues that have dire consequences on a company. The author claims it is important to conduct small, regular audits in order to ensure that produces are being performed correctly and operations are being carried out adequately. Daks begins the article by saying, “Uncertainty is the enemy of business. If small problems in a company are ignored or go undetected for long, they can grow into major problems and cause extensive damage.” (Daks, 2012) In other words, problems may seem trivial in the beginning, but if a company lets them fester they can grow into issues that may cause the company to collapse. Auditors have experience in detecting issues that the company may not initially notice, and this is why they should be performed occasionally. Smaller, more regular audits also ensure that the employees are adequately carrying out their work, and they are less likely to commit fraud. If they know that their work will regularly be checked, they will be less inclined to intentionally make mistakes.
Companies do not want to incur the costs of more audits in a given time period. Although audits are costly, the benefits outweigh the costs, especially if the audit catches a small issue that turns into a future disaster. This is observed in the article titled “Energy audits can result in big savings; Mississippi municipalities benefit from stimulus funds.” In this article, Amy McCullough observes the cost savings of energy audits of public buildings like police stations and libraries. Numerous cities have received stimulus funding in order to receive these audits. Energy audits consist of various recommendations that could relate to thermostats, windows, and lighting. The point of these audits is conserve energy in any way possible in order to reduce costs. McCullough claims, “Audits involve prioritizing energy usage by cost effectiveness, determining problem areas in a facility and identifying energy-efficiency opportunities. In this time of economic recovery, every dollar counts.” (McCullough, 2011) The author’s point is that businesses and companies are continually looking for ways to cut costs, especially in this economy. Audits aim to improve a company, and while they may cost money themselves, they save more money in the long run. Even though this article specifically refers to energy audits, the same concept of cost saving applies to financial statement audits.
Companies do not want to incur the costs of more audits in a given time period. Although audits are costly, the benefits outweigh the costs, especially if the audit catches a small issue that turns into a future disaster. This is observed in the article titled “Energy audits can result in big savings; Mississippi municipalities benefit from stimulus funds.” In this article, Amy McCullough observes the cost savings of energy audits of public buildings like police stations and libraries. Numerous cities have received stimulus funding in order to receive these audits. Energy audits consist of various recommendations that could relate to thermostats, windows, and lighting. The point of these audits is conserve energy in any way possible in order to reduce costs. McCullough claims, “Audits involve prioritizing energy usage by cost effectiveness, determining problem areas in a facility and identifying energy-efficiency opportunities. In this time of economic recovery, every dollar counts.” (McCullough, 2011) The author’s point is that businesses and companies are continually looking for ways to cut costs, especially in this economy. Audits aim to improve a company, and while they may cost money themselves, they save more money in the long run. Even though this article specifically refers to energy audits, the same concept of cost saving applies to financial statement audits.