How an audit firm helps in verifying financial statements and keeping businesses free from possible fraud?

In a constantly changing economic environment, private and public organizations must be able to understand their various challenges. This is what will enable them to make the decisions that are necessary today with a view to the sustainability of their activity in the long term.

To do this, companies must call on?audit firms?with a team of experienced professionals whose points of view will allow the manager to make the right decisions.

An?audit firm?designates a consulting firm that has recognized expertise in the field of auditing. Such a company, which generally consists of a multidisciplinary team, offers a very complete service including other services such as taxation, law, and much more.

It is a structure within which work experienced professionals or more precisely auditors capable of carrying out a precise diagnosis essential to the making of the good decision by the leader’s work.

What is the role of an audit firm?

The audit firm as presented above plays a leading role in private and public sector companies. Thanks to a personalized approach, an?audit firm?evaluates the work being done in a company and assesses whether the company is in line with established rules.

Regarding working methods, organization, and personnel, an audit can fulfill different functions depending on its nature.

The role of the quality audit, for example, is to check whether the quality objectives set by the client company have been achieved. It is for the auditors to ensure that the quality management systems comply with the applicable contractual, normative, and regulatory requirements.

As for the accounting audit and financial audit, it is an examination of the company’s financial statements aimed at evaluating its accounts and verifying their sincerity, conformity, and regularity.

Responsibility of the auditors in the identification of fraud in the financial statements

Audit firms?have the responsibility to testify about the veracity of the Financial or Accounting Statements and must consider that they may deviate from the truth, among other reasons, due to fraud. To this end, what they must do, at a minimum, is:

• Whether the organization’s control environment fosters fraud prevention awareness
• If the established organizational objectives are realistic or if, on the contrary, they expose the Administration to undue pressure to achieve them
• Whether policies and procedures are in place to promote appropriate conduct through formal standards and training, such as a Code of Ethics or Conduct
• Whether clear authorization rules are established and adhered to
• Whether there are adequate channels for reporting misconduct
• If there are fluid and transparent communication channels throughout the organization so that each person knows what they should do, or if there are, on the contrary, undue leaks or, conversely, concealment of information
• Formulate recommendations to implement or make more efficient the controls in force to prevent and detect fraud

In other words, a difficult situation can be rectified with an audit firm insofar as it makes it possible to identify the problems and propose the appropriate solutions.

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise.?AKGVG & Associates?does not intend to advertise its services through this.

Posted by:

CA Aman Aggarwal

AKGVG & Associates