What does an audit do?

0 like 0 dislike
307 views
in Articles - SilkPredator
If a business breaks the rules of accounting and ethics, it can be liable for legal sanctions against it. It can deliberately deceive its investors and lenders with false or misleading numbers in its financial report. That's where audits come in. Audits are one means of keeping misleading financial reporting to a minimum. CPA auditors are like highway patrol officers who enforce traffic laws and issue tickets to keep speeding to a minimum. An audit exam can uncover problems that the business was not aware of.

After completing an audit examination, the CPA prepares a short report stating that the business has prepared its financial statements, according to generally accepted accounting principles (GAAP), or where it has not. All businesses that are publicly traded are required to have annual audits by independent CPAs. Those companies whose stocks are listed on the New York Stock Exchange or Nasdaq must be audited by outside CPA firms. For a publicly traded company, the expense of conducting an annual audit is the cost of doing business; it's the price a company pays for going into public markets for its capital and for having its shares traded in the public venue.

Although federal law doesn't require audits for private businesses, banks and other lenders to private businesses may insist on audited financial statements. If the lenders don't require audited statements, a business's owners have to decide whether an audit is a good investment. Instead of an audit, which they can't really afford, many smaller businesses have an outside CPA come in on a regular basis to look over their accounting methods and give advice on their financial reporting. But unless a CPA has done an audit, he or she has to be very careful not to express an opinion of the external financial statements. Without a careful examination of the evidence supporting the amounts reported in the financial statements, the CPA is in no position to give an opinion on the financial statements prepared from the accounts of the business.

Please log in or register to reply to this post.

Related posts

0 like 0 dislike
0 comments 298 views
0 like 0 dislike
0 comments 304 views
0 like 0 dislike
0 comments 293 views
0 like 0 dislike
0 comments 317 views
0 like 0 dislike
0 comments 288 views
0 like 0 dislike
0 comments 339 views
0 like 0 dislike
0 comments 250 views
0 like 0 dislike
0 comments 1,348 views
0 like 0 dislike
0 comments 411 views
0 like 0 dislike
0 comments 370 views
0 like 0 dislike
0 comments 392 views
0 like 0 dislike
0 comments 351 views
0 like 0 dislike
0 comments 340 views
0 like 0 dislike
0 comments 330 views
0 like 0 dislike
0 comments 289 views
0 like 0 dislike
0 comments 339 views
0 like 0 dislike
0 comments 333 views
0 like 0 dislike
0 comments 444 views
0 like 0 dislike
0 comments 416 views
0 like 0 dislike
0 comments 405 views
0 like 0 dislike
0 comments 411 views
0 like 0 dislike
0 comments 440 views
0 like 0 dislike
0 comments 438 views
0 like 0 dislike
0 comments 423 views
0 like 0 dislike
0 comments 402 views
0 like 0 dislike
0 comments 390 views
0 like 0 dislike
0 comments 403 views
0 like 0 dislike
0 comments 435 views
0 like 0 dislike
0 comments 389 views
0 like 0 dislike
0 comments 389 views
0 like 0 dislike
0 comments 423 views
0 like 0 dislike
0 comments 377 views
0 like 0 dislike
0 comments 409 views
0 like 0 dislike
0 comments 405 views
0 like 0 dislike
0 comments 362 views
0 like 0 dislike
0 comments 425 views
0 like 0 dislike
0 comments 341 views
0 like 0 dislike
0 comments 345 views
0 like 0 dislike
0 comments 350 views
0 like 0 dislike
0 comments 288 views
0 like 0 dislike
0 comments 332 views

55,458 posts

595 comments

2 comments

502,669 users

Connect with us:
...