All you need to know about auditing
Auditing is the objective examination and evaluation of a company’s financial statements. This is usually performed by an external third party but can also occur with internal parties as well as government entities.
Auditing is very important in the accounting world, and audits will take place by examining and verifying a company’s financial records to make sure that transactions are represented fairly and accurately.
The three main financial statements that will need to be prepared, checked and set to their relevant accounting standards for an audit are income statements, balance sheets ad cashflow statements.
These statements are prepared internally before auditing and are used to provide useful information to creditors, shareholders, customers, government entities, partners and suppliers.
Financial statements aim to capture the operating, financing and investing of a company through it’s recorded transactions. All of these statements are recorded and developed internally, which means there can be a high risk of fraudulent behaviour. Without standards and regulations in place, businesses can present themselves to be more profitable and successful than they are in reality. This is why auditing is so important. It ensures that a company is representing their financial position accurately and fairly.
There are three main types of audits. Internal, external and government.
Internal audits occur within a business itself. The audit is performed by an internal employee or company organisation. This particular type of audit is not made to be shared and distributed outside of the company, but rather prepared for management or for other internal stakeholders.
These audits can help with improving decision making withing a company by giving managers a good overview of the company’s financial position, as well as provide them with action items that can help improve internal controls. It is also a good opportunity for them to ensure that all laws and regulations are being followed.
The second type of auditing is external audits. This occurs when an external organisation performs the audit in order to provide an unbiased opinion that can sometimes be hard for internal staff to perform. These external audits are used to determine whether or not there are any errors or misstatements in a company’s financial statements.
External audits are really important when it comes to allowing various stakeholders to confidently make decisions surrounding the company that is being audited. This is an even more reliable source than an internal audit as the information represented is more honest ad there are no personal factors tied to the company like there may be if the audit was performed internally.
The last type of audit is a government audit. Government audits are performed by entities that relate to ensuring that financial statements have been prepared accurately to prevent the misrepresentation of the amount of taxable income a company has.
Misstating taxable income, whether it be a mistake or intentional, is considered tax fraud.
Once a government audit has occurred, it can result in no change to the tax return, a change that is accepted by the taxpayer or a change that is not accepted. If the latter option occurs, the issue will go through a legal process of mediation or appeal.
Auditing is an extremely important business process that needs to be regularly and thoroughly carried out in order to avoid any misrepresentation of a company’s financial situation. If you need any help or advice in regards to your company’s audit, please don’t hesitate to get in contact!
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Buying and selling property rarely lines up perfectly. The logistics of it all can be incredibly stressful. If you’ve found the perfect next home but haven’t sold your current one yet, a bridging loan can make your move easier, without having to wait on your current property sale. What is a bridging loan? A bridging loan is a short-term loan that gives you the funds to buy a new property before your current property has sold. It’s designed to bridge the gap between buying and selling. These loans are generally interest-only and are typically offered for up to 12 months, giving you time to sell and settle on your current home while already owning the next one. When would I need a bridging loan? You might consider bridging finance if: You’ve found your next home but haven’t yet sold your current one. You want to avoid renting or moving twice between sales. You want more time to prepare your home for market to get the best sale price. You're building a new home while still living in your existing one. How does it work? Peak Debt: The lender combines your current mortgage, the cost of the new property (including stamp duty and legal fees), and any interest (if it’s being capitalised). This total is known as your Peak Debt. Interest Only: During the bridging period, you’ll typically pay interest only — or the interest may be capitalised (meaning it’s added to your loan rather than paid upfront). Sell Your Property: Once you sell your existing home, the sale proceeds are used to reduce your Peak Debt. End Debt: The remaining balance becomes your End Debt, which then continues as a standard mortgage. An example of a bridging loan. Your current home loan = $200,000 New home = $800,000 Total bridging loan (Peak Debt) = $1,000,000 After selling your home for $600,000, that amount is used to pay down your loan Remaining loan (End Debt) = $400,000 Things to consider. Like any major financial decision, it’s important to understand all the moving parts before you commit. Time pressure: You typically have 6–12 months to sell. If you don’t sell in time, the lender may step in to sell the property and/or charge default interest. This is an extra interest rate that a lender charges when you fail to meet your loan obligations — in this case, not selling your property within the agreed timeframe. Interest costs: If interest is capitalised, it means you're not making repayments during the loan period, so the interest gets added to the loan balance instead of being paid separately. This means your loan grows each month. Making even small repayments can help keep this under control. Equity & serviceability: Lenders will assess how much equity you have and whether you can manage the loan during the bridging period. Loan-to-value ratio: If your End Debt ends up being more than 80% of the new property’s value, you may have to pay Lenders Mortgage Insurance (LMI). Existing loan setup: If your current lender doesn’t offer bridging loans, refinancing may be required — sometimes triggering break fees if your existing loan is fixed. This means you may have to pay a penalty if you end a fixed-rate home loan early (before the agreed term is up). Is a bridging loan right for you? That’s the big question. Bridging finance can offer flexibility and peace of mind, helping you move forward with confidence rather than being held back by uncertain sale timing. But it’s not without risk or cost — so it’s vital to understand the structure, timeframe, and repayment expectations. If you’re considering your next property move and want tailored advice on whether bridging finance suits your situation, talk to the team at Ascent Property Co. or Ascent Accountants. We can also put you in touch with finance brokers to discuss what is best for you.
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