3 Initial Steps To Understand When Performing A Financial Audit

The process of examining organizations internal controls, financials and overall compliance with reporting standards is usually handled by an auditor. For publicly traded companies, regular and mandatory audits are done through outsourced audit firms. In contrast, small firms are not often subject to stringent audits. Educating yourself on how to perform audits on your business will help you ensure that your business is managed well and will help you understand its strengths and weaknesses. Find out below how to get started on a basic financial audit.

Understand the main purpose

The main purpose of a financial audit is to ensure that the financial information in your business is “true and fair”. This type of audit usually involves careful examination of the financial statements, although not quite like finance jobs, financial audits are performed by an auditor who is ideal chartered accountant.  However, small business audits are generally carried out by the IRS to check over reporting standards unlike large public corporations where external and internal auditors make sure that the statements are valid for their shareholders.

Reasons for an audit

There are various reasons and benefits to performing finance audits in your company. Some of the most evident reasons are to ensure that the information in the statements is valid and comply with the accounting standards. Banking and finance openings in Singapore for employment are generally for individuals to start off as trainees or internal trainee auditors in the bank so that regular examinations can be made to ensure accuracy and efficiency of procedures. Most importantly, audits will enable the owner or the management of an organization to understand how their business is managed and what steps can be taken to improve further.

Creating an audit trail

A trail in an accounting audit consists of paper and electronic sources of documentation of the transactions since the inception of the business. This trails typically trace the financial data from the general ledger to the transactions been made. It is important to determine if the existing accounting practices in your company enable you to track the complete process of the financial data and transactions. If this is not already in practice, then it is vital to strengthen the trail so that you create an efficient and effective map of the transactions of your business. It is also advisable to employ accounting software that is most suitable for your business in order to store and record your financial activities more easily. It is also the most effective way of analyzing a large number of accounting data.