Each successfully operating company conducts an audit of financial statements. It can be either internal (that is, using the organization’s own forces) or external (using the services of a third-party company). In both cases, this check should be carried out within the framework of the current legislation.
Audit of financial statements is a process consisting of certain stages. First of all, preliminary verification planning is carried out, then evidence is searched (the use of information obtained from a third party is allowed). At the final stage, the data obtained is documented, grouped, analyzed and formed by the auditor's own opinion on the financial condition of the enterprise.
Audit planning involves establishing the scope of the audit, selecting a methodological base, drawing up a general plan and developing a work schedule for the auditor with a specific client. Gathering information means obtaining audit evidence that either confirms the correctness of reporting or serves as the basis for identifying errors and omissions. If the audit of the financial statements cannot continue due to a lack of documentation received, the auditor has the right to contact third parties in search of additional information, and it is possible to obtain data both in the form of an oral survey and in the form of written requests.
The result of the audit is the personal opinion of the auditor, expressed in the act of audit. The final conclusions of the specialist should be based only on truthful data, therefore, they should be clearly argued. The audit firm is obliged to present to its client the final document expressing the final decision of the specialist. It can be absolutely or conditionally positive, negative, and also in some cases, the auditor issues a refusal, if there are appropriate grounds. Of course, an audit of reporting cannot be absolutely reliable, since the influence of external factors, especially human, should always be taken into account. In addition, if the auditor has reason to believe that the audit was not carried out adequately, he should inform the authorities and increase the volume of audit procedures.
Verification can be carried out without fail or at the initiative of the company itself. Mandatory audit of financial statements is carried out, as a rule, once a year. The initiator of such a procedure is the state bodies, and the time and procedure for conducting the audit are fixed by legislative norms. A proactive audit is carried out at the request of the enterprise itself using internal resources or services of a third-party organization specializing in this field. An audit of financial statements involves the consideration and study of the annual balance sheet, a report on financial results, on capital flows, various kinds of applications, explanatory notes and other things.