Everyone agrees that the family component gives family businesses a significant competitive advantage over other companies. This competitive advantage can, however, turn into a threat if it is not properly controlled. Business risks arise as a result of both internal and external pressure.
An example of an external influence is the current economic climate, which forces business owners to take more account of major risk factors that can adversely affect the performance of the business, such as the global recession, fluctuating prices, limited lending opportunities and declining consumer confidence.
Over the years, family businesses have been successful in controlling such risks. It is our experience that their willingness to look towards the longer term, and the fact that they can rely on their family (including less immediate family members) in an emergency, helps them to keep their head above water when times are tough.
External assurance is particularly important for owners of family businesses that are managed and controlled by external managers.
Outside the field of the traditional audit, there are numerous issues to consider when you want to deal with risk management more proactively.
Do you possess accurate management information and performance metrics in order to effectively manage your business?
- Is the quality of the non-financial information that you receive as reliable as the information that is provided by your accounting systems?
- Do you need more assurance about your investment decisions for your bank, management board, supervisory board, or about the quality of your data, or the quality of your results compared with the forecasts? Do you need more assurance before you decide to proceed with a takeover, or if you wish to minimize the risk of capital loss or bankruptcy after a takeover?
- Do you require assurance about your supply chain and its processes and about control mechanisms to prevent reputational damage?
In order to properly address these crucial aspects of your business, you must be proactive so you can anticipate any changes in the macro environment that affect you, your family and your business. If you ensure that your business has the best people, systems and processes in place, you will be in a good position to cope with the risks accompanying a family business.
How can we be of assistance to you?
As you would expect, a KPMG audit complies with our core values, including integrity, and provides you with a reliable and independent viewpoint. Our visible and ongoing commitment to quality in all of our teams will not surprise you either, but what about our objective with respect to innovation and daring? These are also core values that help our audit teams to address assumptions and give them greater insight, so they can provide efficient services that transcend the financial audit.
The KPMG audit methodology is designed in such a way that we focus on the risks that could have a material effect on your financial reporting, which means that we test your control mechanisms in order to reduce risks in the field of financial reporting. We also report potential risks, so you are better able to anticipate changes.
Finally, we recognize that the audit of your financial statements can produce valuable business insights. People who manage a family business must, however, increasingly rely on forms of assurance that transcend the traditional external audit, and that is also what they do. The skills, precision and robust approach that we, as auditors, apply in many parts of your business similarly find expression in our assurance services.