Every entrepreneur must understand the need for an audit in the company. Performing an audit has many benefits for the company, but many myths and rumours are going around relating to the auditing of a company. These are some of the myths that deter us from conducting an audit which ultimately hampers the company.
In this blog, let's establish these myths as hoaxes and take care while conducting an audit in the coming time.
Myth Number One: Auditing is a Boring Profession
It is usually agreed upon by everyone that professions like auditing and accountancy are very droll and very dull. Whenever we say auditors a picture of a scrawny person with thick glasses sitting in front of a colossal ledger appears in our mind. This image is just a figment of our imagination. In reality, the auditing and accounting professions have seen a substantial disruptive change in the job.
Gone are the days when auditors sat in front of large books. Nowadays, everything is done online or through a computer. There are various soft wares which help in decreasing the time of a process which would have taken days to perform manually to mere hours. An accountant or an auditor is also privy to information which is not given out to common people or to the employees of the company for that matter.
Myth Number Two: Fewer the Audit, Better the Organization
While auditing, the management of the company has to provide various information of confidential nature to a third party. This makes the administration feel that there is a risk to the future of the company. It is because of this reason many companies do not conduct an audit of the company.
Also, the management feels that conducting an audit of a company, again and again, will lessen the goodwill of the company and will decrease the share value. In reality, conducting the audit, again and again, will help in catching hold of any mistakes in the process or any illegal activity. An audit report will also provide transparency to the financial information of a company and will make it easy to share it with the investors.
Myth Number Three: Auditors Always Try to Find Faults in the Financial Books
According to a rumour, the auditors always try to find faults in the finances of the company. This nit-picking distracts the management of the company from running the company properly.
This myth is wrong. First of all, it is the job of the auditor to find any mistake or deviation in the finances of the company. The auditor will scrutinize even the minutest of process and then report about it to the management. Moreover, the auditor helps to run the company properly by notifying the management of any possible error in the finances of the company.
Myth Number Four: Shortly there will be no Need of Humans for any Audit
It is possible that soon the contribution of technology in this field will be a much greater hat in the present, but in any case or scenario, it is not possible for a company to rely a 100% on any accounting software or any robot for auditing.
Understanding the complete finances of a company will require human aspects and emotions, which is very difficult to reproduce in a machine.
Myth Number Five: All Internal Accountants Are Auditors
It is a common belief that an auditor has the same training as an accountant. Many people believe that auditors only focus on the various financial records of a company. This is a complete and absolute myth.
Yes, the work of the accountant and the auditor involve a lot of financial data and records of the company, but where the accountant only prepares the data and reports it to the management, the auditor emphasizes the detection of error and fraudulent activities in the business.
Myth Number Six: There is a Checklist of Actions to be Performed for Audit
The auditors may use a fixed process of scrutiny, but the process is not the same for all the companies. The various companies need to check the different parameters, and KPIs of a company and not all companies have the same KPIs. The method of auditing depends upon the size of the company and the amount of service it requires.
These are a myth and may have been true some years back but not now. At present, all the above are just myths and enhance the stereotyping of the auditors.
Auditing requires special knowledge and skill so that every financial detail of the company is obtained. JAXA Chartered Accountants has teams of accountants and auditors, which will provide all the solutions to the economic problems of your company. For more details on the various services, it gives do contact us. We will be happy to help.