Account Auditing Can Show The Financial Position Of A Business   by Jeremy Winters

in Business    (submitted 2012-01-16)

Account auditing is considered a very essential part of corporate management. Such management is meant to reassure stockholders in a business that the best management practices are in place and can help to increase the reliability of the management.

Auditing Financial Statements

International financial standards have led to standardization of practices in investigation and auditing of financial matters. Account auditing examines reports that are normally prepared at the end of a financial period and give a complete analysis of the financial condition of a company. Such audits are mandatory for all public companies who need to file for exemptions based on such audits. The accounts that are audited include the profit and loss statement and the balance sheet of the company for the period under audit. Such auditor's reports have to be certified by management appointees. Auditing is essential for any business to operate smoothly. Businesses that are very small can hire public accounting companies to do the auditing. Such companies, besides verifying the accounts, will also help to plan business activities so that they fall within the norms of acceptable accounting practices.

Auditor Duties

An auditor who does the account auditing has to review all the financial statements and certify that they have been properly prepared. They must also monitor all the internal controls that the company has to ensure integrity. They must scrutinize them to see that the company guidelines are being followed. Auditors need to be certified professionals. Auditors are normally internal auditors that work within a company or external auditors who are paid separately by the company to do the account auditing. Internal auditors will analyze accounts and financial records to see that all the required norms and integrity of the accounts are maintained. This work can be quite tedious, and requires the right amount of knowledge and training to be able to handle audits successfully.

How Are Audited Statements Used

Auditing leads to the preparation of audit reports that can be used for a variety of purposes. They can be submitted to the tax authorities and company management. Shareholders and other investors can also find them to be useful, and stock market analysts will use audited accounts to decide on the financial health of a company. Such statements also help to establish financial credibility. Any audit report that has no qualifications can almost definitely indicate that the business has been following all the correct procedures and controls that are in conformity with the principles of accounting.

Audit reports based on proper auditing give unbiased opinions that are of use to bankers or other financial institutions that are willing to loan money to an enterprise.

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