What is Auditing and Why is it Important?
Auditing and Its Importance in an Organization
Auditing is an independent examination of accounts which is done by professionally qualified auditors which are external to the organization. Auditors properly inspect the books of accounts and present their fair view without any biases or hidden agenda.
An audit results in an audit opinion about whether the financial statements give a ‘true and fair’ view of the:
- state of affairs of the organization and
- operations for the period.
Here are a Few Reasons Why Auditing is Important?
- Government Compliance: An external auditor can help identify areas where your books or accounting practices are no longer in compliance with the applicable provisions of laws. An External Audit can also pinpoint where your compliance efforts may be lacking. Audited financial statements ensure great reliability for tax authorities and financial institutions.
- Credibility: Financial statements will carry more weight if they’ve been signed by an external auditor.
- Prevention of error: Sometimes an outsider may pick up on something that has previously gone unnoticed. External Audit/Financial Audit sometimes reveal potential template or system irregularities, which can easily be corrected.
- Professional Competency: Auditors are professionally competent to examine every financial record to verify their accuracy and discover all mistakes or frauds committed within the organization.
- Improves Internal Systems and Controls: Auditors do not just focus on the financial statement but will gain an understanding of the businesses overall systems and controls environment. This will enable them to identify deficiencies in the accounting systems or controls for which recommendations can be made, making business more efficient and less prone to fraud or error.
- Promote Accountability: Auditing helps to promote accountability for the managers and employees in the organization.
- Detailed overview of the business: When the auditors have concluded their findings, organization will have the final report in the hands. Management will have a complete picture of how their business is working. Even if Management have spent a lot of time ensuring that their company has clean records and abides by every rule possible, there are bound to be small mistakes that should be corrected.
Financial Audit Service in the UAE
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