The financial audit, also known as accounting audit, is a method by which the information that a company has reflected in the statements of its accounts is examined and analyzed. Said audit may be carried out by an internal or external auditor to the company, but an auditor from the private sector, not the public, as happens for example in the tax audit.
The objective of the accounting audit is to determine whether the statements of accounts and records that companies or corporate entities make in them comply or not with current accounting regulations, without hiding any vice or bad faith, or hiding or camouflaging some state (think bankruptcy, lack of solvency and liquidity, etc.).
The accounting audit examines the statements of the accounts of a company and analyzes whether or not it complies with accounting regulations.
Within the private sector, it is common for companies to hire a specialized auditor to perform this accounting approved auditors in Dubai , it is advisable to do it from time to time. However, it is not uncommon to see that large companies have their own department that performs the audit.
After carrying out the accounting audit, the auditor must issue a written report, as a commercial document and following the standardized format established by the Accounting and Auditing Institute (ICAC) and the existing International Accounting Standards.
What will the report of an accounting audit contain?
Identification of the company that is being audited, the one that is submitted to the accounting audit.
General description of what the accounting audit will cover.
Technical opinion by the auditor.
Opinion on the concordance or not of the management report with the accounts, reporting on possible deviations between what is reflected by the company and reality.
Date and signature of the auditor who has made the accounting audit report.
Accounting audit procedure
SMEs are seldom subjected to an accounting audit as rigorously as large companies can. Therefore, it is worth knowing the basic procedure so that the employer himself can carry out an accounting audit and learn more about the status of his accounts.
Read also: What is an internal audit?
What is the financial audit procedure ?:
Make an audit trail. The best thing to do is to use accounting software to keep a complete and reliable record of all financial activities, easily analyzing any movement.
Review of registration policies. It is essential that we keep the information organized and that it is reliable and secure: from cashed and canceled checks, to product returns, everything. Having the information well stored will allow us to make it accessible and, in the event of any deviation, it will be easy for us to detect the mismatch and, above all, the origin of the problem.
Process of delivery of accounting documents to the accounting department. What method is used to archive invoices, receipts, bank statements, etc.? How is that information transferred to the accounting department? We must design an agile and reliable process.
System to monitor the internal control of the company. For example, that the person in charge of the books is not the same person who manages the cash. Thus, internal control is much easier and more agile when it comes to detecting any possible scam.
Accounting laws to abide by. Adopt the official procedures and formats when making the accounting record; it will facilitate the task in the medium term. These procedures are governed by the General Accounting Plan.
Read also: What is an audit system?