Importance of Auditing
A financial auditing
is a process of examining an organization’s financial records to determine if
they are accurate and in accordance with any applicable rules, regulation, and
laws. There two types of audits:
External and internal
audits.
External auditors
come in from outside the organization to examine the accounting and financial
records and provide an independent opinion on these records. There is a law
requires that all public companies have their financial statements externally
audited.
Internal auditors
work for the organization as internal employees to examine records and help to
improve the internal processes such as operations, internal controls, risk
management and governance.
Importance of an Audit Systems to companies
Auditing means
evaluating the effectiveness of a company’s business objectives, obtaining
reliable financial reporting on its operations, minimizing its cost of capital.
An effective audit
system is important for every company because it enables it to pursue and
attain various corporate objectives. Some of the advantages are:
• Risk of misstatement
• Fraud prevention
• Cost of Capital
Risk of misstatement
Auditors assess the
risk of material misstatement in a company’s financial reports. Without a
system of internal controls or an audit system, a company would not be able to
create reliable financial reports for internal or external purposes.
Fraud Prevention
Audit serves as an
important role for companies in fraud prevention. Recurring analysis of
company’s operations and maintaining an accurate system of controls can prevent
and detect various forms of fraud and other accounting irregularities.
Cost of Capital
The cost of capital
is important for every company, regardless of its size. Cost of capital is
largely comprised of the risk associated with an investment. Strong audit
systems can reduce various forms of risk in an enterprise, including its
information risk.
About US || Orient
Audit, Dubai
Orient Auditing is a
full service certified accountants firm located in Dubai. We provide audit,
accounting and financial statements preparation and business consulting to
small and mid –midsized businesses. If you are looking for any accounting
services. Get the best service from Orient Audit Dubai.
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