An audit is basically an “external examination of financial data of any organization, whether profit-oriented or not, irrespective of whether its size is small or large, irrespective of whether it is an autonomous firm or not and irrespective of whether it has been created by a government body or by an agency of a public sector organization,” according to the latest version of the “International Code of Corporate Auditing” published by the “International Conference of Auditors (ICOA.” An external examination is not limited to financial institutions or to large corporations.
The basic objective of auditing is to check the effectiveness of the internal control systems that are in place in the organization. The audit is carried out by external parties such as independent consultants or accountants. Most of the time, these external parties are also responsible for the publication of an accounting journal. This publication is used by those organizations in charge of the accounting to evaluate the performance of their internal control systems.
In order for the audit process to be successful, there is need for proper implementation of policies and procedures regarding financial transactions in the organization. This is not possible unless the employees and the managers have been properly trained and the necessary training materials have been made available.
For the purpose of achieving a good quality audit, the company’s management should also ensure that the policies and the procedures of the internal audit committee are strictly adhered to. There are many professional firms who provide services related to auditing. They work closely with the companies that have audited in the past and the results are used in the planning of future audits.
It is important for the manager of the organization to take care of the process of auditing, and it is also required for the auditor to make sure that all the information required is gathered and analyzed properly. Any changes in the company’s accounting system should be reported immediately. A professional accountant should also be consulted, when the situation demands that special expertise is required. There may be cases where the company may require outside help in case of accounting errors.
A proper audit will help improve the overall efficiency of the organization. It will also help the company in gaining recognition from its financial institutions and customers. An audit will also help the company avoid losses and save money, because the audit process will reveal all errors and irregularities.
The role of the internal audit committee in the completion of an audit is relatively limited. The committee should review all financial records of the company and review the financial statements before reporting to the management.
After reviewing the financial statements, the committee should conduct an analysis of the company. The analysis should consist of the identification of potential errors and irregularities in the financial statements and in the accounting practices and should be supported by relevant supporting documentation. The final report should also include recommendations for improvements to be made to the accounting practice of the organization.
There are two kinds of auditing that can be carried out. The first is called the in-house audit and the other one is called off-site audit.
The responsibility of conducting an in-house audit belongs to the internal audit committee of the company. The committee should carry out the audit within the limits of the company rules, and regulations, and must adhere to the code of ethics of the company.
Third-party auditors are responsible for the conduct of an off-site audit. Off-site auditing is carried out to verify that the company’s accounting procedures are still acceptable to the financial institutions, and that the company has made all the necessary arrangements to allow the auditor to perform his functions.