Comprehensive Guide To External Auditing Process
In the boundaries of businesses and brands, auditing is a basic need. There are always some mistakes that each of us makes and that is inevitable. However, you can reduce the mistakes by doing just one thing, cross-checking.
Cross-checking everything can save you time, effort, and also potential issues that will come as a consequence of that mistake. In the boundaries of businesses, it is called auditing. It is simply the process of cross-checking everything but it is not this simple and straightforward.
Auditing is a much more complex and technical thing in itself and it contains numerous different parts. In this article, we will give you a comprehensive guide to auditing and external auditing in specific.
What Is Auditing?
Auditing on a deeper and technical level is a thorough check and inspection of all the finances of a company or its accounts. There are two types of auditing that deal with the company and its accounts in a different manner respectively. One of them is Internal Auditing and the second one is External Auditing, both of them are briefed below:
Internal Auditing
This type of auditing involves the internal team of the company, corporation, or business. The internal teams are the first ones to check all the accounts and bookkeeping records processed by the team of accountants.
External Auditing
External auditing on the other hand involves an external team of auditors outside of the company or corporation. They are the ones who audit the company as a whole and not just the accounts of the company. This means that they check for issues, potential risks, fraud, and theft. Thus, it is a more deep audit that is transparent and unbiased in its nature, or at the least, this is how it should be done.
What Is The Process Of External Auditing?
So the question arises, how does external auditing work and what is its process? Behold with us, as we get into the comprehensive process of External Auditing, but first let’s see what is purpose and aim of it. The main purpose and aim of an external audit is to check if a business is complying with accounting standards and has accurate financial records or not.
Process Of External Auditing
The process of external auditing consists of four steps:
Appointing An Auditor Or Auditing Firm
Auditing Program
Gathering Of Necessary Evidence
The Report
1. Appointing An Auditor Or Auditing Firm
The first and foremost part of the external auditing process is to appoint an auditor or an auditing firm. While one can hire any of them, it is important that no matter who you choose they should not be working for the business whose finances they are auditing.
An auditor is chosen based on various qualities such as their qualifications, skills, and their reputation within the industry and the same goes for the auditing firm. However, an auditing firm is always the better option in almost all cases as they provide extensive support and bring along advanced techniques and state-of-the-art technologies to give you the best results.
2. Auditing Program
During the external audit, the auditor conducts a review of the company's financial statements. This involves collecting and analyzing data to evaluate the accuracy and completeness of the financial information presented. The auditor uses the information to gain an understanding of the company's operations and to identify any potential risks or issues that may impact the financial statements. The financial statements typically include important documents such as the balance sheet, income statement, and cash flow statement, which provide a comprehensive view of the company's financial performance.
3. Gathering Of Necessary Evidence
During this stage of the external audit, the auditors collect evidence to verify the accuracy of the company's financial statements and ensure compliance with accounting standards. This evidence-gathering process includes examining the company's accounting records, checking compliance with accounting policies, and verifying the value of assets the company has acquired. The auditors conduct these procedures to confirm whether the company's financial statements are true and fair representations of its financial performance and position.
4. The Report
After conducting a thorough investigation, the auditor prepares and submits a financial report that expresses their professional opinion regarding the financial position, activity, and accuracy of the business being audited. The report summarizes the scope of the audit and presents all relevant evidence gathered during the process. The auditor's opinion confirms whether the financial statements provided by the business present a true and fair view of its financial activity during the auditing period.
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If you are the one looking for a comprehensive and thorough checkup of your business's financial and overall health then you might connect with Spicer Pegler (the best Auditing Firm in UAE). They have been in this field for over 10 years and have been providing extraordinary services that one might not get very often.
They provide the Best Auditing Services for companies of all types and sizes with advanced techniques and state–of–the–art technologies. Apart from this, they also offer Accounting And Assurance Services, AML, and much more. You can visit their website to learn more about them and how they can help you and your company.
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