A financial audit is a verification by the auditor that the presented financial statements present a true and fair view of the entity’s financial position. Anyone can order the audit of financial statements – more and more often they are private companies, and even universities and organizations.
What does the audit say?
An audit allows us to determine whether a financial statement is a financial statement:
* is consistent with the application of accounting policy, for example in regulations,
* is consistent with the entity’s by-laws, contracts and, if any, provisions in force,
* is consistent with the accounting books, which are also maintained on the basis of the provisions of the Accounting Act,
* shows the current state of the unit and all the relevant information needed to assess that state.
Audit not as bad as it is written
Do not look at the people who are carrying out checks in the company as an enemy. Although they are looking for errors and omissions in their financial statements, this is their main opinion. On the basis of the data provided, they are able to assess the financial condition of the company, which later on is needed by its owner in order to correct tax and accounting errors. Assistance may also be invaluable in assessing the effectiveness of the risks that are part of the business.
Accounting Act
This document mentions the entities that must be subject to such control. These are, first and foremost:
* banks and insurance companies,
* units trading in securities and investment funds,
* units, pension fund managers,
* “Stock companies with little exceptions.
* other units meeting at least two of the following requirements:
– full-time employment of employees exceeded 50 persons,
– total assets at the end of the financial year were at least EUR 2.5 million (European currency equivalent),
– net revenues from the sale of products amounted to at least EUR 5 million (equivalent in European currency).
The results of this audit are presented to the auditor in the form of an opinion. It has to be supplemented by an auditor’s report. Such documents confirm that the entity can continue as a going concern without changing the scope of its activities. It also gives an opinion on the financial soundness of the entity for the next 12 months.
The article was written in cooperation with specialists from GLC.
Financial audit
