There are many different laws that govern the way in which organizations have to manage their funds. Organizations are held responsible for the proper management of the funds entrusted to them by the government, by investors or by shareholders. Financial audits are used as an instrument to examine the ways in which an organization manages its funds. Almost all organizations, including non profit organizations and charities are required to undergo regular fiscal examinations.
The need for formal auditing of the fiscal dealings of organizations can be ascribed to several factors. The economic environment can be extremely complex and unscrupulous operators can easily defraud the organization if they know that there are no or very few controls in place. It is also necessary to ensure that all organizations comply with the laws.
Auditors are independent professionals that have no ties with the organization being audited. The main task of the auditor is to scrutinize all the records of the organization and to produce a report on the accounting practices followed by the company. In most cases there are also explanatory notes. This report is then generally made available by being included as part of the annual report of the organization.
The auditor is empowered to examine all aspects of the business. This includes each and every transaction, policies and procedures and even the level of good governance displayed by management. Business strategies are also studied and great care is taken to ensure that the business has reported and recorded all their business dealing. In fact, every aspect of the business that can influence its monetary status can be scrutinized.
Many businesses and other organizations submit to auditing voluntary. Non profit organizations, for example, often only qualify for grants or donations if they are able to provide proof that they are able to manage their funds responsibly. Business owners may need an independent report in order to tender for large contracts or when they are trying to attract new investors.
An audit report is not a magical document that can prove that an organization is a hundred per cent financially stable. No auditor can study every transaction and in some cases there are documents that are not made available to the auditor. The report can therefor only be a reflection of those records and documents that were made available and that were actually scrutinized.
It is important to choose an auditor that operates independently and that has a reputation for objective reporting. No auditor can produce a valid report unless all records and documentation is made available for scrutiny. Many businesses prefer to use the same auditor year after year, because a long term relationship allows the auditor to report with full cognizance of the history of the business.
Under certain circumstances auditors are required to report their findings to the authorities. Generally however, auditors are not enemies and they are not out to entrap businesses and individuals. Their job is simply to examine and to report objectively.
The need for formal auditing of the fiscal dealings of organizations can be ascribed to several factors. The economic environment can be extremely complex and unscrupulous operators can easily defraud the organization if they know that there are no or very few controls in place. It is also necessary to ensure that all organizations comply with the laws.
Auditors are independent professionals that have no ties with the organization being audited. The main task of the auditor is to scrutinize all the records of the organization and to produce a report on the accounting practices followed by the company. In most cases there are also explanatory notes. This report is then generally made available by being included as part of the annual report of the organization.
The auditor is empowered to examine all aspects of the business. This includes each and every transaction, policies and procedures and even the level of good governance displayed by management. Business strategies are also studied and great care is taken to ensure that the business has reported and recorded all their business dealing. In fact, every aspect of the business that can influence its monetary status can be scrutinized.
Many businesses and other organizations submit to auditing voluntary. Non profit organizations, for example, often only qualify for grants or donations if they are able to provide proof that they are able to manage their funds responsibly. Business owners may need an independent report in order to tender for large contracts or when they are trying to attract new investors.
An audit report is not a magical document that can prove that an organization is a hundred per cent financially stable. No auditor can study every transaction and in some cases there are documents that are not made available to the auditor. The report can therefor only be a reflection of those records and documents that were made available and that were actually scrutinized.
It is important to choose an auditor that operates independently and that has a reputation for objective reporting. No auditor can produce a valid report unless all records and documentation is made available for scrutiny. Many businesses prefer to use the same auditor year after year, because a long term relationship allows the auditor to report with full cognizance of the history of the business.
Under certain circumstances auditors are required to report their findings to the authorities. Generally however, auditors are not enemies and they are not out to entrap businesses and individuals. Their job is simply to examine and to report objectively.
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