What is Audit Protection Insurance?
Business owners in Australia can face a series of legal threats. Frivolous lawsuits from clients can prove to be quite taxing on your company’s savings, thus making it difficult for you to grow your business. Apart from this, you may also need to your company’s accounts audited each year. There are plenty of benefits of getting your company’s accounts audited. Audits improve the credibility of your financial statements, and give investors the confidence that they need to purchase from your business. If a company’s accounts were audited according to high material standards, this means that the chances of inaccurate reporting are considerably reduced.
The taxation authorities in Australia also check the audited financial statements before making a decision. However, auditing costs money. If you opt for a reasonable assurance engagement, you will need to pay a large sum of money as a professional fee to the audit company. One of the biggest threats that audit firms face is advocacy. If the audit firm makes claims about the company’s position in any public statement, it will be effectively advocating the client’s interests, which could eventually prove to be a professional threat.
In case of a professional enquiry or investigation by the Australian Taxation Office, auditors and accountants generally need to carry out a series of investigations in order to ensure that the figures reported are true. This costs a considerable amount of money. That’s why it’s generally best to purchase audit protection insurance from reputable insurance firms such as Accountancy Insurance.
Why Purchase Audit Insurance?
Audit insurance can actually save you a lot of money in the long run. First of all, one of the biggest benefits of buying audit insurance is that it covers you against additional costs incurred in order to meet several legislative and tax requirements. The government needs to ensure that your business complies with the rules and regulations as set by the Companies Law Ordinance pertaining to:
- Record keeping
- Income, land and payroll tax
- Self-managed superannuation funds
- Workers’ compensation
- BAS/ GST compliance
If you have bought an insurance package from a reputable company such as Accountancy Insurance, you will have the peace of mind that in the event of any charge or claim against your company, you can protect yourself without depleting your company’s savings.
How to Buy Audit Insurance
When you apply for audit insurance, the insurance firm will check your company’s history in order to determine whether the records are clean. If your company has been a frequent target of the authorities in the past, the audit premium will be higher. The premium is calculated based on several other factors, such as the size of the company and the average revenue over the past 5 years. Many business owners purchase audit insurance as they grow, because government agencies generally want to make sure that all figures mentioned on financial statements are accurate for companies that report higher revenues each year.