The activities of any company are displayed in various kinds of accounting and financial documents. The main purpose of compiling such documents is to provide users of this information (management, investors, shareholders) with a complete picture of the life of the company for making certain decisions. In order to avoid errors and contradictions in the documents, an audit of financial statements is carried out. We will discuss the features of this procedure in this article.
In the process of its work, the company is faced with the need to document all the operations that it conducted. This allows you to always have on hand complete information about how the situation is currently at the company. Documentation of operations takes place in several stages. First, all operations are displayed in the so-called primary stage documents - contracts, invoices, sales receipts, and so on. Gradually, information from these documents is transferred to more generalized registers, and from there to reports. Naturally, accountants are living people who also tend to make mistakes or intentionally change data. It is in order to prevent errors or fraud that an audit of financial statements is carried out . Despite the fact that carrying out this procedure is quite expensive, there are cases when it paid off with interest.
The audit of the financial statements of the enterprise is carried out by special employees - independent auditors who undergo mandatory certification and pass exams. The essence of their work is to check the documentation of operations at all stages and identify any inconsistencies. As a rule, the audit of financial statements is not carried out for all documents, but only for individual groups of assets or liabilities. This is due to the fact that at a large enterprise (especially in the banking sector) verification of receivables alone can last about a week. Thus, before starting an audit, company management needs to determine which part of the documentation will need to be verified. Of course, there are cases of a full audit of the enterprise, but such inspections are extremely long and expensive.
The audit of financial statements is as follows: first, the head of the enterprise and the auditor agree to conduct an audit. The auditor briefly familiarizes himself with the enterprise, after which he draws up an audit plan, which is certified by the director of the company. After that, during the specified time, the audit itself is carried out, after which the auditor provides its findings to management. The conclusion can be positive (in case no violations and errors were found), conditionally positive (if there are minor errors and the relative error does not exceed acceptable thresholds, as a rule, five percent) or negative (in case serious accounting violations). The auditor is personally responsible for the results of the audit, and in case of the facts of unfair performance of his obligations according to the service agreement, the management of the customer company may present him with a claim for damages caused as a result of the provision of incorrect information.
It is also important to note that the audit of financial statements is based on compliance with principles such as the independence of the auditor (the absence of any relationship between him and the company management, other than contractual obligations), honesty, objectivity (impartiality and a unified approach to all clients), competence (availability special education and work experience), honesty and confidentiality (non-disclosure of information obtained as a result of verification, to anyone except the client).