Typically audits were used for merely collecting information about financial systems and the financial records of a company. However recently auditing means to inspect, examine and assess the financial statements. There is a two-fold purpose of auditing; firstly, it makes sure the financial statements made are free from errors and frauds. Secondly, it provides assurance to the shareholders and investors that the financial statements of a company are accurate and conform to the accounting standards.
Audits are mainly executed to find out the validity and reliability of information. Financial auditing has given many advantages to different sections; it is one of many promising functions provided by accounting and auditing firms. The errors and frauds committed intentionally or unintentionally are exposed by an audit and its continuous presence minimizes their future occurrence.
Many organizations appoint separate internal auditors who do not stick to the tasks of simply verifying financial reports and statements but also investigate the internal controls of the organization.
Financial statements and records are mainly used by the investors and creditors to make their decisions. However, these statements are made by the companies themselves. How can these statements be trusted? This is where the role of auditing comes. The users cannot examine the accuracy of financial statements themselves, even if they want to. For that reason, auditors review and test each account in the financial statements for them.
Auditors perform a number of tasks; they send a formal mail to the banks, suppliers and customers of the company to check the balance of the cash, accounts receivable and payable. Additionally, they examine the internal control of the companies to verify whether the characters of the employees are honest and truthful. Thus, it keeps the accounts clerks regular and vigilant in preparing timely accounts. The users cannot determine the correctness of financial reports and statements without auditing.
Because the outsiders trust and refer to the opinions of auditors in the financial statements, they choose whether they would like to depend on these financial statements in making decisions. If the opinions of auditors are reliable it means the company neither overstates nor understates its accounts.
If auditing your financial statements is so important to you, than choose our transparent auditing services and be among the hundreds of clients we are already serving in Washington DC area. Mr. Behraz Bahri is the owner of Avicenna, a leading accounting and tax service corporation in Washington DC area. For more information on auditing financial statements, be sure to visit: www.avicennaaccounting.com
What does your financial statements analysis tell your shareholders?
April 7th, 2009 | Financial Security
0 comments ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment