Financial auditing is a process of examining a company's financial statements to determine their accuracy, completeness and compliance with applicable accounting standards and regulations. The primary objective of financial auditing is to provide reliable information to users of financial statements, such as investors, creditors and regulators.
Financial auditing is not mandatory for all companies, but some organizations are legally required to have their financial statements audited. This can include publicly traded companies, non-profit organizations and companies that receive government funding.
Financial auditing is an important tool for companies, as it adds value in several ways, such as improving the credibility of financial statements, identifying fraud and obtaining valuable information for the business. When a company's financial statements are audited, it increases the confidence of investors, shareholders, creditors and other stakeholders in the accuracy of the information presented. Financial auditing also helps to identify errors and fraud that may have occurred in a company's financial statements. Identifying these problems allows the company to take corrective measures to avoid possible future problems.
In addition, the financial audit can provide valuable information for management, such as trend analysis, process improvement recommendations, business strategy suggestions and other useful information that can help improve the company's management. Financial auditing is required by laws and regulations in many countries. Compliance with these requirements is important to avoid penalties and fines, and to ensure that the company is operating in accordance with applicable laws and regulations.
Research shows that financial auditing can be an important strategic tool for the continuity of companies. A study published in the Harvard Business Review found that companies that performed external audits were less likely to experience bankruptcy or be acquired than those that did not perform audits. Additionally, a Purdue University study found that companies that performed audits had greater long-term financial performance than those that did not.
While not mandatory for all businesses, conducting a financial audit can help improve operational efficiency, reduce unnecessary costs, and increase investor and creditor confidence. Research suggests that financial auditing can be an important strategic tool for the long-term continuity and success of companies.
Get in touch with TATICCA – ALLINIAL GLOBAL, which works with integrated audit services, internal audit, accounting, tax, corporate finance, financial advisory, risk advisory, technology, business consulting and training, for more information, visit www.taticca.com.br or e-mail taticca@taticca.com.br and learn more. Our company has certified methodologies for carrying out activities.