You probably might have heard from the word audit some time in your life, but you might think “What is an audit?” This is a logical question because most people will never use the word audit in their life. When you run a business, audits can be extremely important. An audit is a control investigation to determine the status of certain aspects within the business. There are different aspects that can be determined by an audit, but in this article we are talking about financial audits.
A financial audit examines, like the word already says, the financial status of a business or organization. With a financial audit you will have a report which tells you a lot about your current financial performance and position in the market. It gives an accurate representation on things that went good and things that can be improved.
In a financial audit the whole finance part of an organization is examined. There are differ aspects within the report, for example: a balance sheet, income statements, changes in equity and the cashflow. For all those aspects you can find an explanation on what it means and how it’s changed over the past year or period. Most of the times, the results are set in figures to give you a clear overview.
Can you do an audit yourself?
For a lot of companies, it’s possible to make the audits by themselves. When you want someone from the outside to help you, you can hire an audit firm to do the work for you. They will give you an outside opinion and advice.
When you run a big business in the Netherlands, you are required to spread a financial audit yearly. This is necessary so stakeholders know the base information on how your financial status is going.