The audit of financial statements is an important part of a company’s accounting activities. This activity is carried out to ensure that a company’s financial information is accurate, reliable and complies with accounting standards, such as financial reporting standards, whether pure IFRS or IFRS for SMEs, and that the accounting records are free of errors and in some cases fraud. This audit is carried out every year to ensure that the financial statements reflect the actual situation of the company for decision making by the Board of Directors or shareholders or the owner of the business.
PROCESSES PERFORMED BY AUDITORS
During a financial statement audit, the auditors will perform a series of tests to verify the accuracy and completeness of the financial information. These tests include a review of accounting records, a verification of account balances and a review of internal controls.
Auditors will also examine the company’s accounting systems to ensure that the information presented is accurate. They may perform their planning in a risk-based audit, so that once identified, they proceed to test the figures that make up the unaudited financial statement, through substantive testing and detailed testing, issues related to compliance with any regulations that put the ongoing business at risk and significantly impact the financial position of the entity to be audited.
The auditors will also verify the company’s internal control systems. These include financial, accounting, administrative and risk management controls. These control systems are designed to ensure that the company’s resources are used efficiently and that the financial statements reflect reality.
Once the financial statement audit is completed, the auditors will issue a report. This report will detail the areas examined, the results of the audit and recommendations for improving the company’s internal control systems. If the auditors find irregularities or errors, the report will also recommend how to correct them. The financial statement audit is an important part of the accounting process.
Auditors help ensure that a company’s financial information is accurate and reflects the company’s true position. This provides investors, creditors and other stakeholders with greater confidence in the company and its financial information. It is important for business owners to consider the auditor’s objectivity and independence when expressing an opinion on financial statements.