Accounting audits

What is an accounting audit? Let’s start with looking into these terms separately.

Accounting – All companies must keep an accounting system to record and manage their financial data. Financial data must be stored safely and have all proper attributes. Requirements on accounting systems differ according to the size of the business and its turnover.

Audits – Auditors look into all business operations. They investigate and assess all procedures carried out in the business, and point out aspects of business operations that need to be altered or completely changed.

Accounting audits, also called financial audits, investigate corporate finances, focusing on every single transaction made in the business. Accounting audits examine the accounting system, all books, all accounts and all records. It investigates whether the company acts by the rules and laws that are relevant to its business activities. It investigates questionable transactions for frauds.

Accounting auditors are trained to look for mistakes and errors. They look for inconsistencies in the accounting records, inefficiencies and incidents of unethical conduct across all files of financial transactions and other financial data. Accounting auditors view the entire documentation connected to payments scrutinizing every single number and detail.

Audits can be divided into two main groups – internal and external. Internal auditors are employed by the companies and organisations that they audit.  The purpose of internal audit is to obtain independent and objective assurance on business finance operations. Internal audits can also reveal need for amendments and possibilities for improvements. External audits are carried out by an independent entity. Their purpose is to investigate whether the company’s financial data are free of mistakes and reveal frauds.