An organizations financial reporting standard determines the transparency that the company maintains with its board members and primary shareholders, but what it lacks to determine is the crucial intricacies in outlining the cashflows both in terms of influx and outflow of capital. Such a form of detailing can only be generated from close analysis and speculative assessment of the company's financial reports. This is the reason why companies often set up Internal Audit committees or hire external financial audit services to do the needful in compliance with the core financial team of the client company.
Financial audit services often include the external auditors to involve intricately with the proceedings of the client company. Their various duties and functions include –
- Examining all evidence supporting financial disclosure mentioned in the financial reports.
- Assessing the company’s accounting principles.
- Evaluating the efficiency of financial reporting standards set up by senior management.
- Understanding the internal control structure subjected to the financial position of the company.
- In many cases, auditors also revise the Compliance policies and corporate governance policies that are directly or indirectly impacting the current financial position of the company.
- Auditors also speculate the Key Growth Factors and Key Success Factors that had benefitted the company in the previous quarters by going through past financial records and comparing them with the current reports to estimate future growth or decline.
Through the functions mentioned above, the importance of financial auditing services can be estimated. Still, the quality of services that professional auditors provide is something that cannot be fathomed merely by internal analysts. Instead, it can be said that internal financial analysts and external specialized financial auditors are two sides of the same coin. Serving the same purpose to investigate and assess financial policies of a company, the compliance of both external and internal entities provides for a perfect overall perspective and direction to the company, the board of directors, and Key managers to chart a course towards business development and growth.
Reasons to avail Financial Audit Services
1. External Perspective on Financial Reporting
From a professional standpoint, companies must always be open to constructive criticism. This point stands firm in terms of creating transparency concerning the financial status of a company.
Allowing external auditors to review accounts and financial reports of the company does not expose the company to risk but instead helps the company to enable specialized individuals to interpret the decision making and compliance standards of the company that have impacted the financial standings in the market. Such an analysis provides crucial insights into where the company can direct its investments and how it can earn profits.
Auditors often consult Key managerial personnel on diversifying and divesting during the process of making investment decisions.
2. Audit Report as a Document of Legitimacy
Auditors whether external or internal never intend to make alterations to the existing financial documents of the client firm but rather create an independent report addresses as the financial audit report which consists of the key insights, findings, recommendations and suggestions addressed to the client.
Often companies comply with the requirements of audit committees to ensure that they are graced with an accurate audit report that later acts as a document of legitimate financial standings of a company.
Therefore, guaranteeing new future partners and investors that the review by a third party has been conducted into the organization and has thus, yielded fruitful opportunities for making policy changes and corporate amendments.
3. Auditing to support Risk Assessment
The mantra of the corporate world is that 'Business is Brutal' and operating in a stressful risk-filled atmosphere often takes a toll on even the biggest of corporations. Thus, the reason behind companies establishing independent or external Risk Assessment wings/departments within the organization to keep track of the external and internal risks that a company is currently exposed to and could be exposed to in the nearing future. The first step towards Risk Assessment is auditing.
Risk assessment is a day-to-day evaluation, and this form of frequent evaluation requires clear cut documentation of past performance, calculative assumption as well as industry overview. The most comprehensive document for as risk analyst to refer to is the audit report primarily because of the nature of the report, brutal insight, and lack of bias in information supply.
Why Choose JAXA?
Auditing can be a hectic errand for companies that deliver peak performance to achieve core objectives; therefore, the debate on whether to outsource the service or not arises. JAXA is an industry leader in the field of Financial Auditing in UAE and more such popular locations. We comprise a dedicated team of talented individuals specializing in delivering quality service to the clients. Contact us to know more about how to avail of our services.