An independent audit is basically an independent examination of financial data of any organization, whether profit-oriented or not, regardless of its size or form when such an audit is conducted under the supervision of a qualified auditor. The auditor may review both financial statements and internal controls over financial reporting.
Independent audits are considered to be the most accurate and reliable forms of assurance that you can get from a financial institution or government agency. If the company under audit failed to pass the standards of the review, then the auditor may decide to publish his findings in a report which he will submit to the relevant authorities.
The purpose of auditing is to find out if there are problems or errors within the system and also a good way of determining the extent of errors. Some areas where the auditors will look closely at our internal controls over financial reporting (ICS) and the control systems used. It is not uncommon for a company’s internal control over financial reporting and control systems to be less effective than would be expected.
When there are mistakes made in the process of auditing and when the firm’s internal controls over financial reporting are inadequate, this is one area where the auditor has to step in and help make things right. In such a situation, the auditor may suggest changes in the procedures and controls to make them effective. However, he is not usually required to propose solutions himself; he simply refers to the management and the board to someone else who will make recommendations.
Some internal control systems within companies are very complex and may take years to build and improve. While an auditor will take over the responsibility of reviewing these controls to make sure they are adequate, the controls are often not completely eliminated from the equation in the case of a large corporation. Even if all possible measures are taken to correct the deficiencies, the auditor may still be called upon to conduct the audit again.
There are other areas of the internal control systems that an auditor cannot take over, and these include a number of other areas including accounting procedures. and the documentation of the procedures used to keep track of those procedures. The auditor may also have to review internal policies for financial reporting, control and accounting control and even the internal practices of certain internal activities.
The fact is that when an audit is completed, it will provide a complete picture of the internal control system of a firm. A detailed summary of all relevant information relating to the controls is then provided to the management and board. These reports are then used to help them develop better controls over their own company’s accounting and reporting practices so that it is more likely to function properly and avoid the potential problems that were identified during the audit.
There is nothing wrong with a company’s systems and internal controls. In fact, most corporations use their systems to help ensure their systems and internal controls can handle their operations. However, if the controls are ineffective and if there are problems, the auditors are the only ones who can help correct the problems and ensure that the systems and internal controls are up to scratch. When the auditor points out a problem in a report, management and board members are left with no choice but to decide what they want the audit to find out.
The point of auditing is to identify problems in the company’s internal controls and procedures so that they can be worked on before they become too problematic and require major repairs. in order to continue to operate properly and avoid future problems.
Problems found during audits can be resolved by the firm itself or it can be referred to another entity who will investigate and find the problems and work on them. If problems are minor, a company can either fix the problems themselves or have the audit company take action to correct the problems.