Around the globe, annual audit is a mandatory statutory requirement.
It serves several purposes. The government needs information on business activities to compile statistical records and design its policies accordingly. It also helps authorities to plan on resources and infrastructure.
It helps financial and regulatory authorities to understand what’s going on in their country and in other markets. How this helps them to operate and what they do with this information is a complex subject that should not be elaborated here.
It assists businesses to ascertain their own standing, helps the management to understand where the business stands, shape up its internal control systems and improve the primary parameters of capital structure, risk and return on investment and turnover. It is as important to a business as a regular inspection is to a machine or automobile or an annual health check-up for an individual.
Even companies where internal controls are strong and qualified & experienced managers are employed find statutory audits essential. Racing cars capable of delivering exceptional performance make the maximum pit stops and athletes at the prime of their health visit doctors regularly, to give a parallel example.
An audit program is designed after consulting the trial balance generated by the accounting system of the client. Accordingly, a fee is quoted, keeping in note the incidence of scope creep. In accordance with the audit plan, the client is given a schedule of preliminary information to be kept ready. Once such information is ready, audit is commenced. Additional information is sought during the audit. Audit and sample checks are carried out in accordance with the Internal Auditing Standards and the report’s compliance with the International Financial Reporting Standards is established. Thereafter, an audit report is issued. Wherever complications are encountered, the same are investigated further.
Verico Auditing has designed simplified review procedures for its smaller clients. These are typically those businesses that are run by technocrats or persons with no financial background and have not employed the right personnel to churn out regular accounting information. The audit techniques are easy to follow and are aimed at obtaining the best information with the least effort.
For example, the simple list of requirements can be downloaded by clicking here.
It is essential to note that an auditor is an independent authority and insistence of the client to reduce the time taken for an audit or refuse to provide sufficient information constitutes a severe limitation and invites qualification or disclaimer.