What is the audit?

Audit is an accounting procedure according to which the company's financial records or individuals are carefully checked to make sure they are accurate. Many US taxpayers are worried about the audit of internal income services, while dishonest companies are afraid of independent audits of their business practices that can detect embezzlement and other abuse of funds. This review keeps the company honest and also assures employees and investors about the financial status of the organization. There are two primary types: internal and independent audits.

Regardless of the type of audit, it should be assumed that the procedure will be performed without bias. In the case of an internal audit, this may be difficult because the accounting staff of the company concerned is done. In general, this type can only be successfully performed by a large accounting department, because the auditors cannot audit the records they have contributed to. Internal audits are usually performed on regular bases of large companies to ensure that theirFinance is fine, and if the company is publicly traded, the news is available for the inspection of shareholders.

Neutral third party is performed by an independent or external audit, such as a professional accounting company that specializes in the procedure. In both cases, all financial records of the company, including books, bank statements, payroll, tax information, internal financial reports, official reports, payable accounts and receivables, will be examined. During the audit, these records are carefully checked for any irregularity and if inaccuracy is revealed, it must be solved and repaired.

Usually, the audit reveals a simple accounting error. In other cases, more ominous problems may occur. Companies that financially struggle to rescue the company and reveal these decisions close to the audit. Sometimes the review reveals that the company is on the verge of bankruptcyDue to gross abuse of funds by a high -ranking staff, as was the case with many American corporations at the beginning of the twentieth first century, such as Enron and Worldcom.

If inaccuracy is revealed by an independent audit, the auditors are dealt with in the company's final report. In some cases, the review will be ordered by an external organization, such as the Securities and Stock Exchange Commission, which will also receive a copy of the message. The problem must be repaired by a company. Common examples of correction errors are the inability to pay tax tax to the internal Revenue Service or abuse of pension plans. If errors cannot be resolved because the company does not have the funds to solve them, the company may face bankruptcy and the main creditors will be returned to the company's affects are liquidated by an independent company.