Do your company to Auditing services Need financial? In this article, we will look for an answer to this question. But before that, it is better to provide a definition of the company’s audit so that there is no ambiguity; Because auditing can have different meanings and aspects. Transactions, taxes, insurance, production procedures and financial records are some of the items that can be audited. What we mean by corporate auditing, and which we will examine in this article, is auditing the company’s financial records. Financial records refer to the statements of transactions made in the company during a certain period of time, which are recorded by the company’s accountants in accordance with the principles of accounting. In the following, in addition to finding the answer to the above question, we will provide you with other information about the company’s audit process, its benefits, the cost of related services, and so on. be with us.
Types of audits
Auditing is divided into different types according to the goals and duties of those who are engaged in this profession. The most important types of auditing are:
- Financial audit;
- Subjective auditing;
- Operational audit;
- Statutory audit;
- Internal Audit.
What is at issue here is financial auditing. The main objectives of the financial auditor are to verify the accuracy of the financial statements and their compliance with accounting principles.
Company audit work process; Objectives of the Financial Auditor
Financial auditors pursue two main goals in their work: The first goal is to check that the financial statements of companies are properly prepared; The second purpose is to verify the conformity of the information contained in the financial statements with the accounting principles. If the company’s financial statements have been reviewed by a financial auditor, trust in the numbers and figures recorded in them will be much easier to obtain from third parties.
If your company is going to be audited, you need to be prepared to answer a number of questions from the financial auditor. Suppose a financial auditor selects specific transactions and asks you for the necessary documents to verify their validity. The financial auditor will monitor your workflow (set of activities performed in the company to achieve a specific goal) and your company’s security processes to ensure the accuracy of the information contained in the financial statements and other related documents. By conducting these reviews and evaluations, the financial auditor gains a complete and comprehensive understanding of the financial health of the company in question.
Does your company need an audit?
You will not be required to do so unless the competent authorities and individuals in your field require you to audit the company; However, there are situations where you may need a financial audit. If you are looking to raise capital from a third party or a specific body, it is possible that you will be asked to verify the accuracy of the company’s financial statements. Company income, balance sheet, turnover and retained earnings (accumulated profit) will be the financial statements you need in such cases.
There are other situations that require you to audit the company; Suppose you have an employee who, in addition to the salary and benefits he or she receives, credits a portion of the company’s revenue and capital to your account without your knowledge. Or be hesitant about complying with the company’s accounting principles.
Sometimes you may want to take steps to achieve the company’s goals and success with more confidence. In this case, you will need the services of an operational auditor (one of the types of auditors). He will make corrections by examining the economic viability of the activities and their effectiveness.
Examine the need to audit the company according to whether the business is large or small
Another thing to keep in mind when considering a company’s need for financial auditing is whether the business is large or small and the scope of activities. Supposedly, in a small company with a limited annual income of up to 5 to 10 employees, which has no debt, no intention to divest or liquidate the company, and no plans to expand operations in the near future, there will be no need for an audit.
But even in this small company, if investors are found to support its business and there is a certain amount of debt, then the company audit and the use of financial auditor services will be worth it. Another issue that requires small companies to audit is when they plan to take their business out of the private sector in the near future.
Of course, the most common case of corporate auditing is for larger companies and businesses: those with substantial annual income and debt. It is not a criterion whether they intend to transfer in the future or not. Such businesses typically have between 20 and 200 employees, and one of their main goals is to develop and expand their activities. Using the services of a qualified financial auditor is important and necessary for such companies.
Why is company auditing important?
The company’s audit is not intended to identify and eliminate all potential risks, identify errors and mistakes, and provide a definitive guarantee of success; But after that, you will be comfortable that the documents recorded by the company’s accountant are fully in line with the principles of accounting and show the financial situation of the company in full accuracy. In this way, you can use the company’s financial resources with more accuracy and certainty. In addition, auditing a company increases the value of your business to others. Those who provide the company’s financial statements, when they do not see the difference between the numbers and figures provided by you and the real financial situation, will find a positive and good view of you and your business.
Benefits of corporate auditing
Among the benefits of the company’s audit can be mentioned the following:
- Increasing the quality and inadmissibility of the company’s financial statements;
- Third parties and private and public bodies such as banks, investment companies, insurance companies and corporate assessment and qualification working groups will have a better view of you and your business;
- Banks and investors may want to audit the company’s financial statements in order to raise capital;
- If your company is going to be listed on the stock market for the first time, you will need to audit the company and its financial statements;
- If you intend to divest and liquidate the company, your company will have jurisdiction over a company that has not been audited;
- As a company manager, your imagination will be comfortable and relaxed. After the audit of the company, fraud, embezzlement and basically any other unusual and illegal actions (related to the financial issues and revenues of the company) will probably be identified;
- The financial auditor will review your control over the company’s internal affairs and offer suggestions and corrections to increase that control.
Company audit during an annual process
Ultimately, the responsibility for the numbers and figures recorded by the company’s accountant will be the responsibility of the employer, and by auditing the company, we can be much more confident in the accuracy of this information. Another important point is the knowledge that the company’s need for auditing does not end once it has been done, and that it must be revisited once in a while. It is best to audit the company on an annual basis.
Investigating the factors affecting the company’s audit costs
More or less auditing costs depend on several factors. Here are the most important ones:
- Large or small company and business;
- The complexity of the company’s activities;
- Number of company transactions during the year;
- Number of legal assets of the company;
- Whether the company is domestic or international;
- Public or private;
- Having or not having different branches;
- Having stocks and assets in different places or concentrating on them;
- Being a service or productive area of the company’s activity.
Preparation process for better use of financial auditor services
If you need financial auditor services in the future, there are some things you can do to help make the audit process faster and easier. This will save you time and money; This is because auditing is usually a time consuming and costly process.
If you are already thinking and Company accounting Leave it to skilled and experienced people, the information you provide to the financial auditor in the future will be accurate and comprehensive. In addition, this will minimize the number of auditor questions you may have. For this purpose, consider the following suggestions:
- Review and adjust financial statements and related records and documents in a regular process;
- Availability of documents related to company expenses and revenues;
- Accurate and correct classification of costs;
- Prepare a digital format of financial records (a format that can be shared and edited. For this purpose, you can use accounting software);
- Anticipation of information and documents requested by the financial auditor. A complete statement of the company’s transactions and internal financial statements, leases, a list of the company’s assets and price reductions, and evidence of how the company’s accountant is performing are some of the things that a financial auditor will usually need (but not limited to). A significant number are likely to be added).