For value addition in the business

Posted by Apna Accountant on February 11th, 2020

Any businessman whether small or medium should prepare proper books of accounts for daily review of its performance. Enterprise should also appoint auditor to prevent and detect fraud by the employees. Helping protect assets and reduce the possibility of fraud, Improves efficiency in operations. , Increases financial reliability and integrity. , Ensures compliance with laws and statutory regulations. ,Establishes  monitoring procedure. But now a days only big organization go for audit . Because of the cost involved in auditing only the entities for whom the audit is compulsory, opt for audit. But the forgot to do cost benefit analysis. As by auditing they can save much more by prevention of fraud. It helps to identify weaknesses in the internal systems and auditor suggest improvements. It assures directors not involved in the accounting functions on a day-to-day basis and the business is running in accordance with the information they are receive and helps in reducing the scope for fraud and poor accounting. Audit also facilitates the provision of tightening of internal controls that can have financial benefits for a business, including how the business is running, what margins are expected and how these will be achieved. An audit will also enhance the credibility and reliability of the figures being submitted to prospective stakeholders. Audit may also be advantageous if the business is growing and likely to exceed the turnover threshold in the near future, in order to avoid having to revisit the previous years’ figures, once the threshold has been reached. An audit adds credibility to the financial statements for employees, customers, suppliers, shareholders and tax authorities For example Suppliers may not be ready to give appropriate credit limits. Another example is Credit ratings may also  be affected by not having an audit. By doing auditing , the auditors make sure that the financial statements comply with true and fair view and comply with basic accounting and auditing standards.

Auditor doing audit should be independent and should make unbiased opinion on the financial statements by complying with the provisions of the companies act , 2013 . There are basically two types of auditor: Internal auditor and external auditor. Internal auditor reports to the management where as the external auditor reports to the owners i.e. the shareholders of the companies.

Workers working in the organization should provide complete information with the complete books of accounts to the auditor and should also assist him/her during the process of the audit.

Auditor should also make sure of the fact that he will not disturb other workers working within the organization . On completion of the audit , auditor should provide necessary suggestions to the management. And if possible should also check whether the above mentioned suggestions have been implemented by the management or not.

Organizations nowadays in addition to regular audit can also opt six sigma in the processes. By opting six sigma in the processes the organizations will be able to provide defect free goods or services to the end users which will ultimately increases value of the organization.