We need to go for routine checkups to ensure that our health is at an optimal level. The same way a global entity also needs a health check from time to time. Doing this eliminates any surprises and helps time to be on your side.
It is better to perform health checks and stay up-to-date rather than incurring a problem later that costs time and money. Here is everything you need to know about entity health checks.
What Is An Entity Health Check?
In simple terms, this is an audit. It is conducted by independent contractors that inspect if there is legal and accounting compliance within your entity. It investigates possible issues of compliance that may exist.
Performing an entity health check lets a company know if its activities comply with the rules set by government institutions. If they are not, then you can take steps to solve these issues.
Types Of Entity Health Checks
Before you begin with a health check, you need to understand which one your entity requires. Here are two types of entity health checks to choose from:
In-Depth Gap Analysis
This health check look takes a look into:
- The finances
- Accounting and bookkeeping
- The company’s accounting practices
- Transactions and financial statements of the entity
High-Level Corporate Health Check
This entity health check takes a look into three areas of legal compliance which include:
- Statutory registers
- Minutes of meetings
- Registry filings
The best strategy is to combine both the legal and accounting health check to ensure your entity complies. Combining both these checks will provide much better and conclusive results about your entity’s compliance.
Importance Of Health Checks For Your Global Entity
Here are two reasons why you need entity health checks from time to time:
#1. Reduce Risk
The most serious cases of non-compliance can make you end up in jail. This is why you must pinpoint problems beforehand so you can ensure regular and proper compliance.
This will reduce the risk of problems within your entity and you can take steps to improve your compliance practices if need be. Perform health checks to reduce risk and wastage of time.
#2. Sets You Up For Success
Information is power. The more information you have about your company the better you can run it. Entity health checks provide a detailed report of what your compliance status is.
Through these reports, you will find out where you lack and you can these reports as a stepping stone to improving your practices. All successful businesses learn from their strengths and weaknesses to do better.
Final Words
Find professionals to conduct entity health checks for your company. They will ensure every detail is taken care of so your compliance practices can be bullet-proof.
This is a small price to pay for risk-free compliance. It is an investment that will save you legal fees, time, and many other resources in the future. So, set yourself up for success and perform entity health checks on your business.