¿What is an annual accounts audit?
An audit is a very thorough examination of an entity’s annual accounts, undertaken by an officially recognised auditor. This examination is carried out through the application of a series of analysis techniques and procedures, and which always respect the technical auditing rules which are compulsory for the auditor. The final auditing product is a report in which auditors express their professional opinion about whether the annual accounts examined express reasonably the true picture of the economic and financial situation of the entity under audit.
¿What does the auditor’s report express?
It expresses a professional opinion. The auditor gives an opinion on the degree of representativeness of the annual accounts, in other words, on whether these accounts are correctly prepared in accordance with accounting principles and, therefore, if reading the annual accounts provides a true picture of the economic and financial situation of the company.
¿What is an audit for?
Briefly, it serves to lend credibility to an entity’s annual accounts and therefore to enable third parties to put their trust in those accounts when taking their decisions.
¿What isn’t an audit for?
It isn’t to find evidence of fraud or irregularities, since this is not the aim of an accounts audit. Neither is it designed to predict the future of the entity nor to cast any doubt on the way in which the entity and its managers run the business.
¿How much does an audit cost?
Audit fees depend on many factors and cannot therefore be calculated unless by a preliminary study of each case. This preliminary study is generally carried out in the context of one or various meetings with the entity to be audited, where the auditor makes an estimate of the number of hours that will be needed to carry out the task. That number of hours constitutes the basis for determining the fees.
¿Why do companies get audited?
Voluntarily or as a legal obligation.
¿Who is obliged to be audited?
¿What work is involved in an audit?
The entity being audited must bear in mind that it will have to devote a certain amount of time to the request for information from the auditors. It will have to provide a great deal of documentation and information, and the time devoted to meetings will also have to be given consideration.
¿Is an audit always the best solution?
Annual accounts auditing is a service which is perfectly defined by law and by the technical rules of auditing. As a consequence, the parties involved cannot change the contents of this service. In professional jargon, it is common to say “an audit is an audit”. The introduction of any desired variation will give rise to a service which cannot be called an accounts audit.
So, then, an audit is not always the right service. It depends on needs and the objective sought.