Audit

Confidus Solutions · 02-06-2022 14:02:28

Audit is a legal examination of an authority, company or official, carried out by a designated educated and independent person (auditor), which includes gathering information about each company. It also implies evaluating this information by verifying the accuracy of the calculations according to certain criteria that allow them to be certified.

Aim of the audit
The most obvious objective of any audit is to provide an independent and fair opinion of the company's financial condition. The auditor's objective is to examine and report whether the data in the annual financial report reflects the true state of the company. During the audit, the auditor is required to follow all auditing standards set by government agencies.

Other tasks of the final audit are, in addition to the confirmation of the annual financial statements:

Independent appraisal of the company's creditworthiness;
Practical recommendations to the company for improvement in the next financial period.
The above tasks are to be presented in the final report after completion of the audit by the auditor. The qualifications and expertise of auditors are often related to the International Standards of Auditing (IFAC).

audit risk
Audit risks arise when an auditor produces an unqualified report or expresses an incorrect opinion. The reasons for such a function may be due to human factors (detection risk), willful fraud, material misstatement or internal misinterpretation (inherent and control risk).

Types of Audits
The most common types of audit services include:

External audit (statutory audit)
These are the most widely used auditing services. The verification of the accuracy of the annual accounts is entrusted to an external and independent auditor who is neither affiliated with the company nor has an interest in the result of the audit (no conflict of interest). The annual financial statement is certainly the company's central source of accountability. Because the financial statements are prepared and approved by the board of directors, the company's shareholders would rely on the external opportunity to verify the report. Therefore, they invite external auditors. In addition, the regulations of many countries require that the final examination be carried out annually;
Internal audit (operational audit)
This is a voluntary procedure by the organization, which is willing to examine the effectiveness of internal controls, verify and monitor possible fraud, review financial data, examine operational processes and other activities. In principle, any company may carry it out for its own sake;
tax audit
Tax audits are conducted periodically by tax authorities in specific jurisdictions or other randomly selected countries. The purpose of the tax audit is to verify the company's tax liabilities and to analyze the accuracy of the tax returns submitted;
Forensic Examination
This is a special investigative test conducted by lawyers and is widely used in courts and investigations to detect fraud, tax evasion, money laundering and other illegal activities by the company or its officers.

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