Role of an Audit Firm in the Audit Procedure
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An audit firm checks and evaluates financial data for accuracy, as well as ensures that financial statements represent a true and fair opinion about the financial wellbeing of the organization. Their main goal is to examine the financial statements and prepare an audit report based on the findings arising during the audit procedure findings arising during the audit procedure
Operating a business is a huge responsibility since there are a lot of regulatory requirements and taxation policies that all entities must obey. The position of an audit firm in a company plays a key role in ensuring such compliance. Auditors play a vital role in a company since they help to ensure that the financial statements are prepared as per the Financial Reporting Framework. It also checks the effectiveness of internal control. The audit firm’s judgement plays a big role in determining the status of financial statements and the reliability of data.
The audit firm also has certain roles, responsibilities, and obligations under the Companies Act of 2013. As per Indian company laws, here is everything you need to comprehend about the role and duties of an audit firm.
Audit Procedure:
The process of acquiring audit evidence through document examination and inspection, performing analytical and substantive procedures, and gaining an understanding of internal control. This process is helpful in preparing the audit report by obtaining sufficient and appropriate audit evidence from which the auditor can draw the conclusion on whether the financial statements are free from material misstatement.
Methods of Audit Procedure
1) Substantive Audit Methodology followed by audit firms
This strategy finds and resolves difficulties with the financial records’ accuracy. This method comprises an analytical procedure and a test of details. It is a process that helps to obtain conclusive evidence about particular assertions related to account balances and classes of transactions. On the basis of the obtained evidence, the audit firm can verify the completeness, accuracy, transactions, existence and disclosure of the financial records.
2) Analytical Audit Methodology:
Analytical procedures are an important part of audit procedures. This method is used to identify and evaluate the relationships between financial and non-financial data. Application of this method may be different for different types of audits. This method is useful to identify the fluctuations that can have a major impact on the auditor’s opinion. For example, the auditor can identify these fluctuations by comprising the previous year’s data in respect of sales figure, related party transactions, trend ratio, financial ratios etc.
Types of Audit Procedures an Audit firm performs:
1.Inspection:
It is the process of checking the records and documents very carefully. This is also known as a strategy for examining all aspects of an audit.
2.Observation:
The auditor needs to be aware of all the significant matters. For example, the auditor is required to pay more attention in the case of suspicious transactions of an entity.
3.Confirmation:
The auditor can obtain confirmation from internal sources as well as from external sources. This can be helpful to analyze the correctness of financial statements and ensure the entity’s compliance.
4.Recalculation:
This technique double-checks the entity’s data for accuracy. It effectively verifies a company’s mathematical accuracy.
5.Re-performance:
Under this method, the auditor re-performs the various internal control processes originally conducted by the entity. For example, the auditor can reconcile the data of accounts payable and receivable and bank reconciliation.
Why choose us?
Komplytek’s Auditing Service comprises a review of the client’s complete financial data and determining its exactitude. We deliver unmatched audit services such as measuring fraud threats, testing the financial information, evaluating internal procedures.
Our primary goal is to identify the accuracy of the firm financial records, as this is important to the company’s financial health. We also give reliable financial reports and handle other vital aspects involving the company’s financial assets.
We also put in the utmost degree of integrity in delivering factual observation to improve your business processes.
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