How Can Auditing Be Useful For Business Valuation in Singapore?

Auditing and business valuation are highly important to ensure a business is on the right track and performing according to expectations. The significance of these measures is enhanced by the fact that they affect various aspects of a business.

Furthermore, modern businesses face a lot of challenges in terms of managing financial statements, auditing, maintaining a reliable board of companies, and ensuring the long-term success of a business.

Reliable and efficient financial reporting with the help of audit firms in Singapore makes it easy for the company to perform a business valuation.

What is Business Valuation?

Business valuation is the process of evaluating the value of an organization, its interest, or the value of a particular asset or liability of the company. It is a very important process of the corporate sector because many different investors and lenders make decisions based on business valuation results.

It is extremely important for business owners and managers to be familiar with the best practices of business valuation to make sure reliable and accurate results are achieved. These results are then used to make strategic business decisions.

Business valuation is also used to determine the key factors affecting the entire business or a particular part of the company. As a result, suitable strategies can be implemented to ensure all of the available resources are used in the best way possible to increase the value of the business.

Applications of Business Valuation

Auditing is closely associated with a business valuation, so most companies choose to hire the professional services of audit firms in Singapore to perform thorough audits and valuations.

Following are some of the many applications of business valuation:

1. Financial Reporting

Allocating buying cost, goodwill impairment tests, portfolio assessments, and other actions are included. A valuation would be required in cases where the company buys another company to calculate the amount charged for each asset and liability in the firm.

The acquiring company would then have to evaluate the business’s goodwill and determine the cost that was lost as a result of the transaction. Portfolio evaluations are performed in fund management organizations for the purposes of investor monitoring, financial analysis, audits, and regulatory compliance.

2. Business Transactions

Exit strategy, mergers & acquisitions, financial management, and many other important financial operations are included in business financing, and other operations are included. In cases where a company is considering an IPO, a valuation should be performed by a professional audit firm in Singapore so that investors can make a smart decision about whether or not to subscribe to the IPO.

When a company is looking to buy another company, the potential buyer will do a valuation to ensure that the price he is paying is reasonable. In situations where a firm wants financing, a valuation of the company’s assets will be required before funding can be supplied.

3. Litigations

Shareholder conflicts, bankruptcies, damages assessments, the purchase of majority or minority shares, and other events are included in litigations of the businesses. When there are disagreements among shareholders, valuations must be performed to determine how much each shareholder is owed when the company is dissolved.

When a company declares bankruptcy, a valuation of its assets and liabilities is required in order to reach an agreement with debtors and shareholders. When a judgment has been secured, valuation techniques are frequently used to determine the number of damages to be awarded.

In such situations, it is better to hire an independent audit firm that can provide fair and transparent business valuation results to make sure all of the involved parties trust the judgements.

Legal and tax documents

Who Can Perform a Business Valuation?

There is no one particular firm or person responsible for doing business valuations. As a result, a lot of businesses tend to get extremely confused in this process. Following are the people who have the skills and knowledge to perform such valuation:

  • Professional accountants are fully familiar with the law and accounting standards, so they can provide reliable business valuation results.
  • A competent auditing firm can definitely help all types of companies to perform independent audits and business valuations.
  • External auditors from government and tax authorities can also choose to audit your business.
  • Board members, legal professionals, fund managers, and investment bankers.

In Summary

The bottom line is that auditing is very significant in the smooth functioning of a business. Therefore, every business should try its best to comply with the best standards of auditing and business valuation.

If a company is facing any issue, it’s recommended to engage the service of a professional audit firm in Singapore to get competent and reliable services. For more information, feel free to get in touch with us.