Despite recent political upheaval in the country, Guatemala’s economy is in reasonably good shape. The Central American nation’s economy is seeing sustained growth, so it should be no surprise that foreign businesses and entrepreneurs are giving it a closer look. These businesspeople should also give serious thought to hiring an auditor in Guatemala once the time comes.
Right about now, you might be wondering “why would I ever need to audit my small business?” Or, “why would I pay someone to have unfettered access to my bookkeeping?” There are a number of reasons that may not be immediately obvious, but make sense once you hear them.
Reasons businesses hire auditors in Guatemala
- Help attract outside investment
- List the business on a stock exchange
- Uncover any fraudulent/illegal practices
- Reveal any unnecessary expenses
- Comply with local/international regulations
- Internal audit is needed to sell the business
While mulling over a decision to invest or incorporate a business in Guatemala, a good rule of thumb, as always – and this goes for entering any country in the region – is to seek the services of a legal representative in Guatemala to help navigate the local business landscape.
Let’s take a closer look at why businesses in the Central American country (be they large or small companies) might seek to employ the services of an auditor in Guatemala.
6 reasons to open your books to an outside auditor in Guatemala
1. Attract new local/foreign investment
By bringing in an internal auditor to inspect your Guatemala-based business, the company is showing its willingness to be transparent. This helps build credibility, showing any potential investors that everything is done above-board, making investing in the business a safe bet.
2. List the business on local/international stock exchanges
An internal audit in Guatemala is required for companies that wish to ‘take the company public’ and list on the Guatemalan BVN stock exchange, known in Spanish as the Bolsa de Valores Nacional. A certified audit is also a prerequisite for any business to be listed on international exchanges, such as the NYSE.
3. Detect any fraudulent or illegal financial activity
While pouring over a business’s accounts, an auditor in Guatemala will be keeping an eye out for any suspicious and potentially illegal financial movements. These may be innocent accounting errors, or could indicate the presence of fraud, embezzlement, money laundering and/or corruption (the latter of which is in no short supply in Guatemala, unfortunately).
4. Reveal any unnecessary expenses
An auditor in Guatemala can help determine if the costs associated with running a business is within predicted amounts, and reveal any cash flow inefficiencies or unnecessary expenses. If such items are found, the business can take measures to shore up their operation costs.
5. Comply with local/international regulations
Most auditors in Guatemala, and elsewhere, follow one of two auditing frameworks: the General Accepted Accounting Principles (GAAP), or International Financial Reporting Standards (IFRS). These auditing standards are internationally recognized and are a value-add when it comes to attempting to do business and/or secure investments from abroad.
6. Internal audit needed to sell the business
In a case where a larger company intends on acquiring a smaller business, and the owner and/or shareholders of that business are interested in selling, an internal audit will enhance the credibility of the figures being submitted to prospective purchasers.
In some cases, conducting an internal audit to ensure that every financial record is in order can also be viewed as a preventative measure. If it turns out that laws have been broken, then the company can improve their accounting practices privately, and to ensure such malfeasance does not happen again. Internal audits can help shield companies from external audits by local or international regulatory bodies that compel firms to open up their financial records to scrutiny.
Auditor in Guatemala – Internal auditing a 4-step process
Once you decide to hire an auditor in Guatemala to conduct an internal audit of your business’s accounting, here is what you can expect to take place.
- Step 1: Planning – The audit plan often has a checklist to ensure members of the auditing team adhere to broad expectations. The internal audit team may also preemptively plan to meet with management throughout the audit to communicate the status of the audit, or request any additional information needed to ensure due diligence.
- Step 2: Conducting the audit – The employment of assessment techniques ensure that the internal auditor, in Guatemala or elsewhere, understands whether or not employees are complying with internal control procedures. Such techniques can involve measuring transactions matching processes, physical inventory counting, etc. and assess if there is room for improvement.
- Step 3: Reporting findings – An interim report highlighting key findings is usually provided before the full report is released, and will include items that the auditor thinks the board of directors needs to know straight away. In some cases, a draft of the full report will be provided to company management to allow them to provide rebuttals, commentary, and other information that may change the findings of the final report.
- Step 4: Mitigation monitoring – After a predetermined amount of time has passed (typically around six to eight weeks), an auditor in Guatemala may request the latest accounting information to gauge whether or not the recommended audit changes have been implemented. This gives auditors an idea of whether deficiencies/issues/problems etc. have been mitigated or still persist.
Biz Latin Hub can help you find an auditor in Guatemala
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Guatemala City, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivaled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.
As well as knowledge about auditors in Guatemala, our portfolio of services includes hiring & PEO accounting & taxation, company formation, and corporate legal services.
Contact us today to find out more about how we can assist you in finding talent, or otherwise do business in Latin America and the Caribbean.
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