Difference between Financial Control Audit and Financial Statement Audit
20

Oct 2020

Finance is looked upon as the lifeblood of any company, and to have control over the finances of a company will be a boon for any management. In the current business, environment businesses are looking to cut short their expenses and are using various methods to do so. These methods include downsizing of the workers, putting plans for expansion on hold, etc.

In such times if management is able to have full control of all the financial activities of a business, then it is a very big deal. This can be achieved by conducting an audit of the company. What the management should understand is that there is a difference between Financial Control Audit and Financial Statement Audit.

What is Financial Control Audit?

A Financial Control Audit can be described as an audit process in which all the transactions of the company are reviewed. The core objective of this procedure is to find out the financial health of the company and to make certain that all the information provided by the management is accurate. It is the duty of the auditor to check if all the financial transactions of the company are properly recorded and reported in the books of accounts.

It is preferred to use an internal auditor for the purpose of a Financial Control Audit as the internal auditor will have more knowledge about the internal workings of the company and hence will be able to better understand the modus operandi of the company.

What is the Financial Statement Audit?

A Financial Statement Audit can be defined as a close examination of all the financial statements of a company. The auditor must make sure that all the disclosures made and all the results achieved must provide an accurate view of the financial health of the business. The main objective of the audit is to check if all the financial records are being maintained according to the prerequisite of the government.

The Financial Statement Audit mostly comprises if three financial statements which are as follows:

1.Income Statement or Profit and Loss Statement

This statement is prepared for a specific duration, mostly a financial year, and mentions all the business activities and transactions as well as the net profit or loss incurred to the business during the period.

2.Cash Flow Statement

This financial document mentions all the financial transactions that have been conducted by the business, which includes the inflow and outflow of cash in the business (as the name suggests).

3.Balance Sheet of the Company

The balance sheet of the company shoes us all the assets and liabilities of the company, which in turn helps an entity to gauge the financial standing of the business.

The difference between the two are subtle but are present. We have tried to provide a side by side comparison of the two.

Basis

Financial Control Statement

Financial Statement Audit

Time of Performance

The timing of a Financial Control Audit is determined by the management. It can be done monthly or quarterly as decided by the company.

A Financial Statement Audit is conducted after all the books of accounts of the company are prepared.

Auditor

A Financial Control Audit is usually conducted by an internal auditor as he will have more knowledge about the workings of the company.

A Financial Statement Audit is usually conducted by an external auditor.

Definition

A financial Control Audit is the examination and assessment of all the financial controls of a company and its effect on the management.

A Financial Statement Audit is a thorough examination of the financial statements of the company.

Content

A Financial Control Audit understands the financial requirements in the company and provides recommendations to bridge that gap.

A Financial Statement Audit provides an overview of the financial health of the company.

 

Conducting an audit of the company can be a very good and sure-shot way to understand the financial standing of the company. if the benefits of conducting an audit seem very lucrative, then you must take the assistance of JAXA Chartered Accountants. The professionals at JAXA will take care of all the various financial requirements and will also provide various services that will assist the growth and development of the business.

For more details, Contact Us. We will be glad to answer all your queries.