04 Jul 2022

Everything to Know About a Company Audit

Everything to Know About a Company Audit

The financial performance of a company is a sphere that demands critical attention. It indicates how the company is performing and is anticipated to perform. That’s why evaluation of a company’s financial performance is an essential practice to be aware of the company’s financial position and help draw strategies for an organization to grow. The financial performance can be indicated by balance sheets, cash flow statements, and income statements. 

Company Audit |TRC Consulting Service

This practice of checking and analyzing a company’s financial performance is known as a company audit. Regardless of the industries they belong to, all companies indulge in audits to ascertain their financial performance. That said, audits of company accounts are rounds of a financial investigation conducted by internal or external auditors to check if the financial statements are faithful to a company’s financial performance. 

How is a Company Audit Done?

Even though a company audit in India is a requisite for government companies, it’s not for private companies. However, most private companies participate in audits out of their professional obligation to their investors and employees. The company audit enlightens the investors, stakeholders, or board of directors about the company’s operations. This information can include how finances are earned and allocated in a year. Nevertheless, the objective of company audits is to maintain the notion of authenticity and trust within the investor’s mind and regulating authorities. 

Auditors’ work generally includes reviewing the firm’s financial and operational claims and checking for evidence to support a particular claim. 

An example of this can be company XYZ. XYZ claims that they spent INR 10,00,000 on fixed machinery. An auditor’s job would be to determine if the amount was genuinely spent on machinery. A company may be induced to improve its financial performance to make the business look valuable. Auditors examine the authenticity and accuracy of such financial transactions. 

Even though audit consultancy services aim to evaluate the company’s financial performance, they also offer financial advice at the end of the audit to help organizations head in the right direction. 

Types of Company Audit: Internal Audit and External Audit

A company audit can be performed internally or externally. Internal company audits refer to the audits conducted by the company’s internal team of auditors. The company’s accountants and auditors can perform them. Nevertheless, the primary focus of internal audits remains on corporate governance rather than financial records. Additionally, the results of internal audits are not made public and remain confidential among the company executives. 

A private company may not necessarily go for an external audit but always has the option to if their goal is to maintain utmost transparency through systematic and faithful audits. 

As for government companies, not only external audits are mandatory, but public sharing of reports is also a requisite. 

Company Audit |TRC Consulting Service

What Goes Down in a Company Audit?

The overall duration and process of a company audit depend on the company’s size. Nevertheless, the following are the main stages of a company audit. 

Planning

The planning phase is the first and foremost stage in a company audit. The stage involves the auditing company establishing the course of an audit. This can include setting the objectives, process, and procedures. 

Internal Controlling

The stage involves accumulating financial records that are necessary to judge the accuracy of financial records. 

Company Audit

Once the financial records are acquired, the auditors examine their accuracy. The step can involve verifying transactions and relevant organizational processes. 

Reporting 

Once the audits are completed, the reports are shared with the firms. This includes the auditor’s findings and opinions and recommendations regarding the financial performance and operations of the firm. 

Advantages of a Company Audit

A company audit is a routine process, but it has a lot of advantages for an organization. Here are a few advantages: 

Provides a Second Opinion

Although internal audits also examine the financial records to discover inaccuracies, if there are any. An external audit can also provide a firm with a second opinion. This can include their opinion about the right steps in the right direction. 

Evaluate Business Efficiency:

A business might not show promising growth because of some inefficiencies. A company audit can help discover such efficiencies to make improvements. A good example of this can be this: 

An auditing firm audits an e-commerce firm and discovers that the company’s labor costs have increased 3x over the past 5 years. This finding can initiate an investigation to determine the cause of the increase. Once the cause is determined, the right steps can be taken to resolve the issue.

Establishes Credibility 

The objective of a company audit is to verify the financial standing of a firm. This internal or third-party verification builds credibility and confidence in the mind of the investors, regulating authorities, stakeholders, customers, and clients. 

How does TRC Help with Company Audit Services?  

Audits are conducted by Certified Public Accounting Firms (CPA). If you’re looking for a firm to conduct a company audit, TRC Corporate Consulting is a consulting firm you can lean on. 

TRC Corporate Consulting is the best audit company in India, offering an array of services, including tax, consulting, tax, HR, governance risk and compliance services, and IBC Advisory services to brands globally. We are a team of passionate, young professionals specializing in business growth advisory services. With 70+ years of experience in aiding clients to achieve desired growth through our top-level critical advisory and business-oriented results, we are your one-stop solution for a whole range of services, including company audit services. We take pride in being an integral part of a network providing extensive professional services to serve our precious clients in pivotal areas to their business success.

Get in touch with our company audit experts from TRC Corporate Consulting, or visit our official website to know more and get started. 

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