You have probably heard about accounting audits, often reported when large companies are audited, haven’t you? But did you know that auditing can be a great ally to organize the financial management of your business?
If you are experiencing accounting problems and are unable to organize your fiscal and tax obligations, it may be time to consider hiring an external.
In this article we will see what it is, how it is done and how an accounting audit can help your company!
What is auditing?
Auditing is the accounting practice that deals with examining, adjusting, correcting and certifying. The field of analysis of these actions is the activities developed by the companies and their records, mainly accounting.
The main objective of an audit is to identify failures of control or even fraud and irregularities in management. Therefore, it allows the manager to know the problems in their financial management and its causes and consequences, in addition to receiving guidance on corrections that can be implemented.
The audit can be done internally or externally:
· Internal audit: performed by the company itself, by professionals different from those who perform the audited procedures.
· External audit: professionals from outside the company perform the audit procedures.
Although the audit is associated with punishment by the government, it is common for it to be carried out in a preventive manner, to identify errors and correct them so that all formalities are completed.
How is it made?
Audits are performed by an auditor who must follow the guidelines of United Arab Emirates accounting standards. Therefore, the procedures adopted are always quite similar. Here are just the main steps:
· Environmental research: The first stage is the setting and understanding of the analyzed company’s operations.
· Audit planning: The auditor defines what strategies will be adopted and specifies the procedures for obtaining evidence.
· Internal control: The accounting system and control are documented in detail for further analysis.
· Control test: It seeks to define whether the procedures adopted by the company are working and whether they are within the rules.
· Substantive test: In this step, the auditor performs the procedures to ensure that values and other information are recorded accurately.
· Auditor’s opinion: The auditor assesses the results found and issues his final opinion.
With the results in hand, it is possible to correct the irregularities, adjust the procedures that are being adopted by the company to the correct form, and also identify whether errors are occurring or if there is any fraudulent activity.
How can auditing benefit your company?
The audit must be seen as a great ally. When verifying the company’s processes, controls and data, the auditor will not only be pointing out flaws, but giving the opportunity for all of this to be corrected and optimized.
If you face difficulties in your company’s financial management, you will learn a lot of important information to deal with it on your own in the future.
In addition, it is more advantageous for your company that errors made in accounting procedures are corrected through an external audit than discovered by a government inspection. In this situation, in addition to correcting all faults, other penalties can be applied.
An accounting audit helps you to better manage your business, points out flaws that have been committed, optimizes internal processes, can remove many of your doubts and, also, identify frauds in financial management. This can all be of great help to you, right?