An audit is often considered an independent examination of financial data of any entity, be it a small enterprise or a huge multinational corporation, irrespective of the size or structure when an audit is conducted on an annual or semi-annual basis. In some cases, the audit may be requested by the directors of the concerned organization or the shareholders of the concerned corporation. The objective of an audit is to give the organization an opportunity to improve in the areas of finance, accounting, information technology and management practices. An auditor will also need to investigate whether there are any instances of fraud or deception.
In addition to conducting an audit on the financial activities of the organization, an auditor also takes into account the internal control measures of the organization. Internal control measures involve a number of procedures and controls that are meant to provide effective supervision of the management of the organization. They include making sure that the information provided by the company is accurate; that the management and the employees to follow the policies stated in the corporate agreement; and that there are no breaches of the policies stated in the corporate agreement. It is important to ensure that all the procedures and controls that are in place are able to maintain the efficiency and effectiveness of the organization.
In the United States and other countries, there are various rules and regulations which are in place to protect the integrity of the internal control measures. Auditors are required to obtain the authorization of the senior management of the organization to carry out audits. This is to ensure that the audit conducted is not an attempt to influence the decision making of the board of directors. They have to also abide by all regulations and rules stipulated by the National Association of Securities Dealers (NASD) and the International Organization for Securities Dealers (IOSD).
As part of the process of auditing, the auditor will review the financial statements of the organization. These financial statements include the income statement, balance sheet, statement, and statement of cash flows.
The financial reports are usually prepared by the accountant or the bookkeeper of the company. However, there are times when these financial reports are prepared by a separate company that is involved in the auditing process. In this case, the financial reports are prepared by the accountant for the independent auditing company.
The financial statements of the organization are usually reviewed by an auditor after a written proposal has been received from the organization. The proposal will contain all the necessary information about the financial statements of the organization to be reviewed. After the proposal is prepared, the proposal is reviewed by the auditor. The auditor then presents the report of the review to the senior management of the organization. When the audit report is ready, the senior management can either accept or reject the report.
Before the completion of the audit, an internal control must be considered. The audit must determine whether all the controls have been properly established and whether the internal control measures and procedures are still appropriate. If the internal control measures are found to be ineffective, the auditor is supposed to submit a new proposal to the auditing company.