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.
One just has to look at the large number of fraud and theft cases that end up in court to realize that auditing is vital. Modern fiscal systems are sophisticated and it is vital to have measures in place that will make it difficult to commit fraud or theft. Auditing also allow the authorities to make sure that the laws governing the finances of a business are honored.
An auditor is a highly trained professional that is experienced in examining the records of an organization. This expert is never attached to the organization being examined in any way. Only somebody totally independent will be able to produce an objective report. In most cases, the report, together with notes from the auditor, is included in the annual report of the organization.
The report produced by an auditor is really nothing but an account of the financial position of the organization. In order to produce the report, all transactions are examined. Macro issues such as good governance and the aptness of business strategies are also studied. The auditor can examine any issue that may have an influence on the fiscal status of the business and he has to make sure that the accounting practices are sound.
Not all organizations are subjected to compulsory auditing. However, many organizations that are exempt also request investigations from time to time. This is often done if the owners of a business suspect fraud or theft. When companies apply for insolvency the creditors or even the court can order an audit. Charities and other non profit organizations sometimes publish auditing reports to show that their dealings are transparent.
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.
Many employees see an auditor as a sinister person that is intent on catching thieves and on pointing out mistakes. The role of the auditor is simply to report on the status of the organization and upon its record keeping and accounting practices. If they find discrepancies, they report them to their clients and in some cases they may warn about dubious practices.
One just has to look at the large number of fraud and theft cases that end up in court to realize that auditing is vital. Modern fiscal systems are sophisticated and it is vital to have measures in place that will make it difficult to commit fraud or theft. Auditing also allow the authorities to make sure that the laws governing the finances of a business are honored.
An auditor is a highly trained professional that is experienced in examining the records of an organization. This expert is never attached to the organization being examined in any way. Only somebody totally independent will be able to produce an objective report. In most cases, the report, together with notes from the auditor, is included in the annual report of the organization.
The report produced by an auditor is really nothing but an account of the financial position of the organization. In order to produce the report, all transactions are examined. Macro issues such as good governance and the aptness of business strategies are also studied. The auditor can examine any issue that may have an influence on the fiscal status of the business and he has to make sure that the accounting practices are sound.
Not all organizations are subjected to compulsory auditing. However, many organizations that are exempt also request investigations from time to time. This is often done if the owners of a business suspect fraud or theft. When companies apply for insolvency the creditors or even the court can order an audit. Charities and other non profit organizations sometimes publish auditing reports to show that their dealings are transparent.
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.
Many employees see an auditor as a sinister person that is intent on catching thieves and on pointing out mistakes. The role of the auditor is simply to report on the status of the organization and upon its record keeping and accounting practices. If they find discrepancies, they report them to their clients and in some cases they may warn about dubious practices.
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