External Auditing

External Auditing

External
Auditing

What is Auditing in general?

Auditing is the examination of an organization's books of accounts and related documents in order to accurately estimate their accuracy, completeness, and regularity. Such an examination is carried out by a competent and unbiased professional with the help of sufficient appropriate evidence, documents, information, and explanations given to them.

What is the primary objective of auditing?

The primary objective of auditing is to express an opinion on the true & fair view of the financial statements. In auditing & accounting, the main concern is to determine whether the recorded information appropriately reflects the economic events that occurred during the accounting period. The dominant principle of auditing is to examine the financial information produced by an accountable party & provide an assurance to the owners/shareholders of the company as to whether the information recorded by the accountable party is true & correct. The discovery of fraud & error are also part of the primary objective of auditing. When an entity whose accounts are being audited is target, greater reliance is to be placed on the accounting system / internal controls in use for the detection and prevention of errors and frauds. Hence due to such reliance on accounting system / internal controls the auditor opts for test-checking technique to ascertain whether the accounting system adopted is reliable.

External Auditing

Advantages of Auditing for a company

The advantages of auditing for a company are countless but to name a few are:
01
Knowledge of the Actual Position of the Business :

Through an external audit the actual position of the business comes to light. The owners of the business are positively assured that the results being shown by the Profit and Loss Account and Balance Sheet are correct.

02
Detection of Frauds and Errors:

In the process of auditing the accounts of the company, the frauds and errors contained therein also come to light. This also reduces the chances & probability of frauds and errors being committed in the future.

03
Proper Valuation of Business:

If any company is to be sold, then a set of accounts that are audited prove out to be helpful in proper valuation of the business and the valuation of goodwill. In fact, audited accounts are considered more dependable than unaudited ones.

04
Increase in Goodwill:

Public puts greater trust in the accounts of those organizations who get their accounts audited & hold auditing as a paramount exercise this enhances the goodwill of the business. The increase in goodwill makes it very easy for the organization to obtain loans from banks and other financial institutions.

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What is external auditing?

External audit is the process by which an independent auditor checks and verifies accounting records to provide an opinion on their correctness (Free from any material error). All external audits are carried out on sampling basis.Any company wanting to ascertain whether there financial statements or the assertions present in those financial statements are free from any kind of material misstatements would require an external audit to be carried out for getting a better picture of truth & fairness presented by these financials.

 

Purpose of external auditing:

  • To provide transparency of accounts.
  • To monitor the integrity of financial statements.
  • To ensure every individual item presented in the financial statements gives a complete & accurate understanding of it.

Steps involved in conducting an external audit:

The advantages of auditing for a company are countless but to name a few are:

Step 01

Planning the audit to be performed

Step 02

Determining the method of sampling to be used.

Step 03

Assessing the risks of any material misstatements.

Step 04

Deputing appropriate staff to carry out the audit.

Step 05

Gathering sufficient appropriate evidence.

Step 06

Issuing an audit report on the basis of evidence gathered providing a suitable opinion.

How can we at Oxford Auditing assist you with external auditing?

We have conducted more than 100+ external audit assignments and possess a reasonable amount of expertise in carrying out such assignments. With an experienced team of Chartered accountants who have a varied knowledge & audit background, we are well equipped to help our clients with their needs.

We have also worked across several industries such as:

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Shipping

Insurance Brokers

Glass & Aluminum

Foodstuff

Real Estate

Plastic

Furniture

Interior Decoration

Petroleum

Oil & Lubricants

At Oxford Auditing we hold our client satisfaction at the highest level & we are able to achieve this satisfaction through our continuous support & regular fulfillment of commitments.

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