Exposed Audit Process of Company

What is auditing? 

This process involves examining a company's accounting records.  But this does not check every bookkeeping of the company, but it checks the sheets among the according records which are fundamental for keeping the accounts.  The main purpose of this is to check whether the accounting reports reveal a true and fair view of the business.  The responsibility of the auditor of the company is to determine impartially whether these have been disclosed under the prescribed accounting standards and laws.

 

 Who are auditors and who appointed them?

The shareholders who own the business appoint a board of directors to run the business.

To achieve the long-term vision of the business, these directors make decisions, and to audit whether they run the business transparently, the shareholders appoint an auditing firm (charted accountant) once a year by voting at the annual general meeting.  The expectation is that a third party will make an accurate assessment of whether the shareholders' money is properly kept in the business and whether it is invested in the right way.  As mentioned above, the responsibilities of the auditors are to check whether the financial statement published by the business is under the proper accounting practices and legal requirements.  In particular, the thing you should remember is that auditors are reporting to shareholders, and not to directors.

 

What is an audit report?

It is a formal document that is issued after auditing whether a business has done business transactions and issued properly created financial statements by a given period of time. And it expresses the auditor's opinion on the financial statement of the entity and shows the true and fair view of its position at a given date.

 

Why all businesses should audit their financials?

What you need to know is that not all fathers are required to audit their accounts. But the business can do so. According to the companies act, it is not necessary for small businesses and dormant businesses that have not been traded in the stock exchange within a year (businesses that have not been traded to be reported within that time frame) to audit their reports. But the thing to keep in mind here is to consider the laws of the country where you are doing business and investigate this further. 1. Sole Proprietary 2. Partnership 3. Non-Profit Organizations If they audit their reports, they are called "non-statutory audits".

 

Who are external auditors and internal auditors?

According to the Companies Act, limited companies need to appoint an independent auditor to monitor their transactions. (This does not apply to dormant companies) In the annual general meeting of public limited companies, the shareholders choose an audit firm and they conduct business audits. They are called external auditors. The primary purpose of these auditors is to re-examine the accounting reports issued by the business and give their conclusions. Then the shareholders can reach a correct conclusion about the truth and the real nature of the business. Internal auditors - In addition to external auditors, the directors can appoint an internal auditor to check the internal transactions of the business. They are employees employed within the business and their role is to conduct an internal audit of whether the business is conducting its transactions properly. When they see any deficiencies in the day-to-day transactions of the business, they advise the employees of the business on how to correct them. They provide information about the internal affairs of the business directly to the board of directors. Appointment of internal auditors is not essential but it plays an important role in the smooth running of business transactions.