In addition to business processes, company audits are an important activity that you must do regularly. Here are the reasons why companies need to be audited.
For carrying out routine business processes, it is indispensable to choose auditing and taxation services in India. The audit is carried out on the company’s financial statements, which serve as the best source of information on the current condition of the company.
Financial statements are a form of corporate responsibility to fulfill the accountability demanded by stakeholders or interested parties.
The audit report prepared by the top audit firms in Delhi contains complete information on financial performance and position which will later become the basis for decision making. That is why the company’s financial statements must be guaranteed fairness and truth.
The audit process is the best way to ensure the fairness and correctness of a company’s financial statements. Auditing is not just looking for mistakes or fraud. However, the audit aims to ensure the conformity of the financial statements with applicable accounting standards and provide an objective view of the current condition of the company.
The purpose of conducting a financial audit is to find out information about inventory and other important components of a company. An audit is also used to check whether the information present in the financial statements of the company is correct and matches with the actual events or circumstances.
However, overall the objectives of an audit can be divided into 3, namely:
- Appraisal of Control (Assessment of Control) which relates to administrative control at all stages of the company’s operations and aims to determine whether existing controls are effective in achieving company goals.
- Appraisal of Performance (Performance Assessment) is the collection of information that can then be used as a basis for management to improve company performance.
- Assistance to Management where the results of the audit in operational and compliance checks are recommendations for improvement for the management.
What is audited in conducting an audit of financial statements?
Before conducting an audit, the company needs to prepare the data to be checked. So that in auditing financial statements, things that must be checked include:
- All transactions that occur in the company, which include purchases, sales, inventories, job costing, cash, and cash equivalents, and general ledger transactions.
- All documents related to all buying and selling transactions in the company as well as documents related to the inventory flow starting from raw materials.
- All fixed assets owned by the company.
- Compliance in the calculation and payment of taxes.
The company can maintain and develop its business by conducting regular audits. By conducting an audit, the company can also obtain other benefits, namely increasing the credibility of the company, increasing the efficiency and honesty of employees, increasing the company’s operational efficiency, and encouraging the efficiency of the capital market.
Thus would it be better that the company conducts an audit to ensure and check the existence of fraud and the reliability of the financial statements prepared by accountants. Audits can also serve as a controller for accounting work.
Many companies find it difficult to develop until they almost go out of business because they have never carried out a routine check-up business process. Like people who have chronic diseases become incurable due to being late in doing regular health check-ups.
Therefore, it is suggested to do a business check-up as early as possible to find out and anticipate the worst conditions in your company.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
Posted by:
CA Aman Aggarwal
AKGVG & Associates