The “Audit” word has been derived from “Audire”, which is a Latin word, meaning to hear. However, auditing is a formal examination of bookkeeping, documents and vouchers of a business concern so as to verify the profit and loss (P&L) as well as the financial position of a business entity. Apart from this, it’s a systematic check or evaluation of financial records of an organization or company to establish accuracy and proficiency.Hire a reliable and popular audit firm in Pune for making an audit report of your company.
Business owners need of audit in order to make sure the correctness of all records relating to their business. Besides, audit is also vital to determine whether or not, the financial statements of the company, profit and loss account and balance sheet have been prepared in a way as to show the summary of the flow of transactions as well as the position of a business enterprise. Also, detection and prevention of errors are very important in order to make sure the accuracy of the records. Therefore, audit is very important for businesses today.
Audit helps to find out errors or frauds as it involves a detailed verification of accounting records, and this promotes a moral check on the employees and workers through which their efficiency may be determined as well. Audit is a successful device for a Business Management, as internal audit is conducted in order to make sure the policies are being followed. Also, it lets to make valuable suggestions for improvement, development as well as to formulate future policies of a business. It helps management to review the policies from time to time as well.
At present, the scope of internal audit within a company is broad and may and may include like an organization’s governance, the reliability of financial and management reporting, compliance with laws and regulations, risk management and management controls over efficiency or effectiveness of operations, etc. In addition to this, it may also involve conducting proactive fraud and to determine potentially fraudulent acts, participating in fraud investigations and conducting post investigation fraud audits to identify control breakdowns and build up financial loss.
Every year, small businesses lose a big amount of money to employee theft. Check tampering, skimming payments from customers, improper payroll transactions and cash theft and misuse of company credit cards are some of types of fraud committed by employees and workers. Many small-business owners believe they lack the staff to carry out audits to combat these problems. But, a small business may create a program even with a small staff, for monitoring employees. A declared approach of internally auditing financial transactions for fraud can inhibit an employee or worker from misusing organization resources and assets.
Audit is of incredible significance to gain trust in investors of a joint stock business entity. The investors can make sure whether or not they need to invest capital. as the audited statements are very much useful.