Page 166 - E2 Integrated Workbook STUDENT 2018

Chapter 12

3.2 External stakeholders

Relationships with auditors

The external auditors will review the system of internal control in order to determine
the extent of the substantive work required on the year-end accounts. The auditors
will identify the areas of weakness and recommendations for improvement. It is
important that the management of the finance function know that they are properly
managing the risk of any internal control failures.

The finance function should implement any recommendations from the audit to
enhance the efficiency and effectiveness of the information sent to management. It is
important therefore that the finance function as decision makers fully understand the
benefits of a good audit and should be extracting the maximum benefit from the
company’s audit service.

Investors and lenders

In spite of their absence on a day to day basis, investors and lenders often rely
exclusively on the legally mandated reporting requirements of the organisation to
gain an understanding of company performance. They rely on the accuracy and
predictability of the data coming from the companies in which they invest. This shows
the importance of good data for external reporting and the important role the finance
function can play in maintaining credibility with the external community.

Tax and statutory authorities

The finance function must be prepared to gather the necessary information and
documentation to support remittances to taxing and statutory authorities. Finance
need to be familiar with legal and statutory requirements prevailing in their respective
locations and promote compliance throughout the organisation and then reporting to
and filing returns with relevant authorities on a timely basis.

160