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Importance of Auditing
Importance of Auditing

Auditing is carried out for the evaluation of the effectiveness of the company’s internal controls. If the company doesn’t have an effective control system, it might not be able to achieve all of its objectives. The audit should be given prime importance by the companies because they help the businesses in preventing any fraud or inappropriate assets. The internal and external audit both helps the company in achieving its objectives in effective ways by identifying and taking a step for removing all the errors that could be harmful to the health of the company.

An effective audit system is very important for the company and for that purpose, you can hire the services of auditing firms in your country. A company needs to have different controls implemented and followed internally to run properly. The internal auditors thoroughly review the company’s processes and identify all the irregularities which may appear to be fatal in the long run.

 

Misstatement Risk

The decision making for the businesses relies very much on previous documented experiences and results. This can only be acquired from the financial statements. If any of the financial statements, assessed by the auditors through the financial reports of the company turn up to be untrue or dissatisfactory to the auditors, it will be deemed a material misstatement. If the audit results appear to be dissatisfactory, it would mean that the company’s financial systems are not accurate. This will help the company in determining the ways of allocating their resources. If anything, that is mentioned in the company’s documents wrongly, it will get detected through the audit which will ultimately make the company take an action to identify and the cause and fix it in favour of the company. This can prove to be really supportive for the companies and their wellbeing.

 

Fraud Prevention

Fraudulent techniques can damage the companies in a lot of ways. The internal audits in UAE have left auditors here amazed about how people in the organization come up with newer and strange ways to do the frauds. The experienced auditors can help the companies in avoiding the fraud or preventing it. If a company analyzes all its functions through audit processes, it can prevent or detect fraud. The auditors in UAE help in the identification of frauds which ultimately helps the company in making its internal systems more secure.

 

Capital Cost

In terms of capital value, no matter whether the company is small or large, the cost of capital is of great importance. It largely comprises of the risk that is related to the investment. If the investment is associated with more risks, a higher return rate for the investment will be required. The audit is also important as it will help you determine different risks that a company may face along with its investment risks.

 

Considering the importance of the audit, there is no possible denial for its need in organizations. If you pay attention to your company’s audits and its identifications, you can save yourself from a lot of hazards. So, beware of what your audit results appear to be. Prevent your company from getting betrayed in any way through proper audits.

 

Risks Associated with Lack of Audit

In organizations, there are people made responsible to make sure that the capital is invested according to the budgets and estimates an in an efficient way. There should not be any financial or other activity that should harm the company assets be them liquid or other. Different case studies revealed very unique ways how people in the organization were knowingly and even unknowingly involved in fraudulent activities. Even some very sophisticated and financially transparent failed to figure out fraud cases within their organizations at earliest.

Having no accountability towards the handling of assets can lure people in organizations to do frauds. They would be sure of not getting caught by manipulating tracks of all transactions. Such activities are extremely harmful to the growth and even existence of any organization, no matter how well it is generating its business in the market. The internal frauds and mishandling of assets can kill the company from within just like cancer. 

 

Audit: It’s Not Just Important, It’s A Must

Considering the defined and associated risks, the necessity to run any business or company successfully and efficiently requires accountability. But accountability cannot be achieved without the audit. It is a must for any organization to do internal audits. This is important to identify and cater those causing harm to the organization.

This is not all that, an audit is very helpful and important when there is a conflict. The audit report helps identify who is at the wrong end and who deserves to have any compensations if there are any. This is the reason why government and public offices also have adapted auditing as a way to find the actual and real standings of companies.

Audits can be carried out internally and companies can acquire services of auditing firms in their country of operation to carry out the audit transparently and independently. This is a very first and important step to authenticate the transparency of the auditing process. The companies need to get their businesses audits to avoid facing any harms in the future.

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