Why Financial Auditing Can Determine A Company's Future

Financial auditing is a method by which an organization employs another organization, usually an accounting firm, to thoroughly examine the internal financial affairs of that organization. In many cases, this audit is not required by law, but is an asset to the company which has ordered it. This is usually because that company is seeking to raise finance, either from banks or from share issues. The way these audits are carried out depends to a large degree on the nature of the organization being audited. Companies of any type and size can be audited, as can governments and government departments.

There have been audits of some kind carried out for centuries, ever since the fourteenth century. In the early times, an audit was simply something which could be shown to interested parties to reassure them that everything was in order. The audit still satisfies that function today, although it has become a lot more complex. Audits have been common since the start of the Industrial Revolution, when the numbers of businesses started to increase dramatically. This was the point at which investor money suddenly had far more choices available to it, and therefore companies wanted to present themselves in the best possible light.

The desperate need for companies to compete for available investor money has brought with it the inevitable side effect, which is companies covering up their own inadequacies using creative accounting methods. Some of these methods are blatantly illegal and have had extremely serious consequences. Never was this more clearly displayed than in the recent Enron scandal, which resulted in a major company suing for bankruptcy, and the disqualification of the accounting firm which audited them.

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This incident has only confirmed the pressure which auditing firms are under. All financial audits are carried out in an environment where creative accounting and the hiding of pertinent information are perfectly possible, yet the penalty for not discovering these anomalies can effectively be the destruction of the accounting business and the loss of hundreds of jobs. Auditing firms operate under huge pressure every day, yet they are funded by the very businesses which can be hiding information from them.

Financial auditing will only achieve the high degree of accuracy it needs if the penalties are kept at these extreme levels, because there is always the possibility of collusion. As it is, it is extremely hard for a company to pass an audit without having the genuine infrastructure in place to warrant it. The fact that auditing is so exact and cases such as Enron are so rare means that investors have confidence in the results of audits. A large corporate investor, which can choose virtually any investment for its funds, can easily be swayed by the results of financial auditing.

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Telegraph.co.uk

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Cogta to aid poor performing municipalities - IMIESA

IMIESA

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According to Cogta Minister Des Van Rooyen the department has a Back to Basics Programme as an overall framework and it is working with the Auditor General's office, National Treasury, provincial Cooperative Governance and provincial Treasury .

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Building Science & Energy Auditing Fundamentals - Buildings (press release) (blog)

Buildings (press release) (blog)

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This 2-hour course provides a comprehensive overview of residential building system basics and energy auditing principles. The program begins with an introduction to the fundamental energy and science concepts that shape the performance and analysis of .

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Alum Rock faces credit slam after critical state audit - The Mercury News

The Mercury News

Alum Rock faces credit slam after critical state audit
The Mercury News
The bathrooms at Cesar Chavez elementary school are EURœin despicable condition,EUR Gonzalez said. She was objecting to the board spending $10 million to build a Fischer Middle School multipurpose room while delaying repairs on basics like bathrooms and .

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Global Audit Software Industry report indicates Industrial Forecast, Growth Rate & Market Share 2022 - MilTech

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The report firstly introduced the Audit Software Market basics: definitions, classifications, applications and market overview; product specifications; manufacturing processes; cost structures, raw materials and so on. Then it analyzed the world's main .

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