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Things To Know About Audit Of Financial Statements

Why companies/businesses get their financials audited every year? Before answering this question, one thing should be ascertained here that preparation of financial statements is entirely different with audit of financial statements. People sometimes confuse audit of financial statements as outsourcing of a book keeping department. Audit means issuing an assurance report on accuracy, relevance and appropriateness of financial data used in preparation of accounts. It means that financial statements are prepared by management of a company. After closing the financials, auditors are appointed who issue an independent audit report after culmination of an audit engagement. Such audit report is primarily addressed to shareholders of a company so that they can evaluate the financial results of an organisation with transparency and unbiased approach. Note that, you can only hire a qualified auditor not merely because an unqualified professional do not possess minimum level of expertise but also because of a statuary requirement to engage only a qualified auditor who owns valid certification from accountancy body of a state. Audit of financial statements involve unique dynamics. Like, in order to obtain financial auditors in Adelaide apply countless auditing procedures in order to verify each and every single head of account.

Such complex and difficult approach do not merely provide reasonable opinion on accuracy and relevance of financial data but also revamp internal control, quality control and reporting system of an organisation. This is the main reason due to which it has been seen that even for those entities which are not legally bound to get their financials audited also prefer to obtain audit report after closing of each financial year. Sometimes, banks and financial institutions demand audit report by reputable firms before granting massive loans to companies. Irrespective of the reason is, no one can deny that getting audited accounts is a worthy decision which always assist companies/firms to lead towards a right and constructive path. In past times, it had been observed that several frauds were detected and by virtue of them, number of fake companies/businesses had been ceased. It is the main reason due to which Government usually encourage companies to obtain audit report by an independent auditor. So, it can be argued that engaging qualified auditors also proffer constructive impact on economy.

So, for every kind of business/company, denial cannot be constructed on this reality that pros of hiring auditors of financial statements always outweigh its cost. Most dominant factors which an organisation usually grab includes a) accuracy and completeness of financial data b) fraud and error detection c) remove the risk of facing any litigation on account of non-compliance with local laws d) improvement in workflow and operations etc.