Every company is liable by the law to audit the financial reports of a company. The purpose of the audit is to provide assurance that the management has presented financial statements that are free from material error. Hiring a certified internal auditor to prove your assurance that your business is financially sound and creditworthy.
What are the types of Statements Audited?
The investor or an analyst look into the income statement as it shows the performance of business throughout for each period. The company’s income statement provides details on the revenues,
Also, the details what the company earns and the expenses involved in its operating activities. Overall, it provides more granular detail on the holistic operating of a company. the income statement shows the direct, indirect and capital expenses a company incurs. The duty of auditor is to check the accuracy of transactions by crosschecking the cash book and individual books of accounts.
This known as the statement of financial position of a company balance sheet provides information on what the company is worth from a book value perspective.
The balance sheet is broken three categories and provides a summation of the company’s assets, liabilities and shareholder’s equity on a specific date. the assets section begins with cash and equivalents, which could equal the balance found at the end of the cash flow statement. The auditor examines the existence of assets and liabilities, and the accuracy of the figures presented.
A comprehensive analysis of the balance sheet can offer quick views. In order for the balance sheet to balance assets must equal liabilities plus equity. In some instances, analysts may also look at the total capital of the firm which analyses liabilities and equity together.
The Cash Flow Statement
This statement gives an overview of how much cash a company has. This also influences its ability to pay suppliers and employees and to meet other obligations.
The cash flow statement provides a view of a company overall liquidity by showing cash transaction activities. it reports all the cash flow sand outflows over the course of an accounting period with a summation of total cash available. The auditor may verify the entries made in the cash flow statement against the bank statement and also check the accuracy of the footnotes.
Audit Opinion Letter
The auditor issues an audit opinion letter after completing the audit process and this included in the audited financial statements. In this letter, the auditor revels the financial statements reviewed and the audit method used. If there are no material errors in the financial statements then the auditor will give an audit opinion that then financial statements represent a true and fair view of the company performance and position.
Find out more info: Financial Audit Procedures for Small Organizations
what are the Stages of conduction audit for Financial Statements?
Planning and Risk Evaluation
The auditor must have an understanding of the business and the competitive environment in which it operates. The auditor also uses its industry knowledge to determine if there are any risks that could affect the validity of the financial statement.
Testing of Internal Controls
The auditor analyses the effectiveness of the companies internal control procedures. However, the focus on limits of employee authorizations, protections and preservation of assets and separation of duties. Also, Control procedures are tested to determine their strength.
If the auditor finds that a company internal control is highly effective, as a result, they may decide to scale on more intense auditing procedures. If any ineffective control procedures detected, auditors will conduct other financial examination to assess the accuracy of financial statements.
Auditors use a broad range of investigative procedures to verify the validity and also accuracy of the company’s financial data. However, fully audited statements are subjected to most intense scrutiny to verify accuracy and correctness.
Auditing of financial statements establishes credibility with a company financial information which also helps shareholders and business owners make informed business decisions. If you’re looking for experts who can perform your audit, seek the help of our seasoned auditors in Dubai, Abu Dhabi, Sharjah, UAE. Audit firms in Dubai with experts that have been working with multiple clients for all their audit needs.
so, our highly qualified auditors offer the most significant level of professionalism in all kinds of the audit. However, in Farahat and co, our approved auditors will also provide all kinds of audit report. For more information, contact us today!
Who prepare audited financial statements?
However, the company management has the responsibility for preparing the company’s financial statement and related disclosures.
Why audited financial statements are important?
The financial statements should be audited because they provide an outside look at accounting operations and overall fiscal health of a publicly held company.
What are the types of the audit?
There several types of audit that can be conducted some of them are as follows:
- Tax audit
- Financial audit
- Investigative audit
- Operational audit