Why The Financial Statement Audit Is The Most Common Auditing Technique

Financial statement audit procedures are necessary in both the corporate environment and in government. The most common type of audit is the one which analyzes financial expenses and how they are arrived at. This is so that managers can see where any savings and improvements can be made, and to present a document to the public which will inspire confidence in the organization and how it operates. There are other types of audit which assess processes and whether they achieve their intended objectives within the company.

This type of auditing has been in existence for centuries, ever since the British monarchy ordered a financial statement to be made public in the fourteenth century. The auditing today is, of course, very different, and the major changes began during the great industrial expansion. As companies and their structures became ever more complex, they need better auditing procedures to be able to cope with them. Technology has advanced in line with this need, and it is now possible to process massive numbers of calculations with near instant speed.

There is still plenty of scope for dishonest managers to attempt to manipulate figures to deceive potential investors. This has been highlighted in several recent scandals, the most prolific of which was the Enron debacle. In this case, false accounting had led to the cover up of serious problems within the organization for years. As a direct result of the company eventually going bankrupt, one of the largest accounting firms in the world lost the right to audit public companies. This incident, and other similar ones, has obviously led to a tightening up of all relevant legislation.

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The financial auditing techniques are also useful to managers who are simply trying to find the most efficient way of running their own company. Audits can be carried out internally using staff who are employed the company itself. Obviously, this will result in a savings over time, as well as the ability for the employees carrying out the auditing to develop a far greater knowledge of the intricate details of the company systems. The risks are obvious, in that someone asked to perform the audit could be connected to someone dishonestly manipulating the figures.

If you are interested in performing financial statement audit operations for a living, you will need to come from an accounting background. This is a profession where formal qualifications are essential, and no-one will be given a chance without them. If your current profession is completely different, you will need to study in your spare time. This is easier than it has ever been, thanks to the many online courses which can be worked in around the hours you have available. These courses will show you how to prepare a financial statement audit.

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