An external audit is an activity of independent experts aimed at assessing the correctness of accounting and the quality of reporting in organizations and firms. It can be carried out both at the client’s own request, and without fail on the basis of normative acts of the current legislation.
If an external audit is carried out at the request of the client, then a contract is concluded with a third-party organization that provides this type of service. In addition, the audit firm may offer services related to the core business, for example, assistance in preparing tax returns, developing specific plans aimed at stabilizing the financial condition of the enterprise.
External audit involves checking the literacy balance, the correctness of the profit and loss statement, as well as the clarity and accuracy of the information displayed in the explanatory note. The specialist performing the audit has the right to receive all the information about the enterprise necessary for the quality performance of the work. It controls how accurately and fully reflected the revenue and expenditure in the balance sheet, and also checks the accuracy of the information.
External audit helps the economic entity, as it gives confidence that the documentation of the company is in absolute accordance with the laws governing accounting rules. In addition, the audit helps to maximize profits, as it allows you to develop specific measures to improve well-being based on the analysis.
The main task of the specialist conducting the audit of the company is to express an opinion on the client’s reporting, its reliability and literacy. At the end of the audit, the specialist issues a conclusion, which indicates the detected errors and recommendations for their elimination. Such checks allow enterprises to maintain a good reputation among partners. Bank audit is especially important for attracting new investors, partners and investors. In addition, a positive audit opinion is the basis for the tax authorities, because they perceive such reports with a greater degree of confidence.
The external auditor in the performance of his duties must obey a number of principles. For example, the principle of objectivity means that a specialist must conduct an impartial and impartial review, the only way to get an accurate and rational assessment. The principle of good faith states that the auditor must individually approach each client and carry out the work with due care and attention.
The fundamental point is the confidentiality of the data provided by the client for conducting a quality audit. An employee does not have the right to publicize this information or pass it on to third parties. When choosing an employee, the audit company checks it for compliance with the principle of professional conduct and competence. The first indicates the priority of public interests and maintaining a reputation at a high level. And competence means having the required education and work experience, as well as possession of certain skills and knowledge, personal characteristics of a person.
And, of course, the auditor should not be interested in the positive results of the audit. Therefore, it cannot be performed if the client is a relative of the auditor or is in close friendly or other relations with him. After all, there will be a basis for approving a conclusion invalid due to the bias of its preparation.