What is auditing?
Auditing is the process of conducting the examination of the financial records of the company. The basic reason behind financial audit is to determine whether the financial records of the company are according to the accounting standards or not.
External auditing is the process carried out by the auditors who come from other organizations for examining the finances of the companies. The external auditors also provide their independent opinion for the betterment of the company. According to the laws for accounting, all the public companies are required to conduct their external audits.
Internal auditing is the process carried out by internal auditors in UAE who work for the organisation itself. They examine the financial records and internal financial systems of the company for the improvement of internal company operations and more.
Objectives of auditing
The main objective of the audit is basically to express an opinion regarding the company on its financial statements. The auditors examine the financial statements for operating the company in a good way.
Primary objectives of auditing
Main objectives of the audit are referred to as its primary objectives. While conducting the primary audit of the company, the following processes are carried out;
• The internal systems of the company are checked
• Arithmetic accuracy of the company’s accounts is checked
• Posts of the company are verified, cast and balanced
• The authenticity of the company’s functions is checked
• Transactions are validated and the nature of the transactions are also checked
• Liabilities along with the value of assets are confirmed
During the primary audit, the auditors check whether all the requirements for carrying out the company operations are being fulfilled or not. The financial status of the company is also presented.
subsidiary objectives of auditing
for helping the company in attaining the primary objectives, the subsidiary objectives of auditing are used.
Subsidiary objectives are as follows;
Detecting errors to prevent them
Sometimes due to careless attitude or negligence of the employees, errors arise in the financial statements of the company. There can be any reason behind the errors and due to auditing, these errors can not only be detected but also prevented in the future.
Detecting frauds to prevent them
Frauds are deliberate mistakes carried out for some personal or professional interest.
Interest may be due to avoiding taxes or to get more commission. Fraud detection is where the major rule of the auditors arises. The auditors are supposed to check misappropriation of goods and cash along with falsification and manipulation of accounts.
Sometimes, top-level executives commit frauds and explain the auditors falsely. The auditors can detect such frauds as well. this can be done by proper evaluation, skills, knowledge and knowledge based on the facts.
Auditing can be a difficult task but it should be carried out accurately because they have a huge impact on the overall growth of the company. So, make sure that the auditing firms in UAE you consult for auditing purpose are good enough to help you with your auditing needs effectively and efficiently.