Auditing Homework Help

Auditing

Financial auditing is basically an accounting process used in business. It takes an independent or external body to examine a business' financial transactions and statements. The main purpose of financial auditing is to provide with an accurate account of a company's financial business transactions. This practice is used to make sure that the company is trading fairly in financial terms, and the accounts which they are presenting to the public or shareholders are precise and acceptable.Purpose of Financial AuditThe financial auditing procedure results are used for the presentation to shareholders, banks and anyone else who has an interest in the company. One of the important reasons for a financial audit is to ensure that the trading company is not doing any fraud. That is the reason that the financial auditing body is generally an independent third party or external to the company.

The United States Securities Exchange Act made it a lawful obligation for all public trading companies to be financially audited in 1934. The Securities and Exchange Commission (SEC) establish a department to deal specifically with this financial audit. 

The financial auditing process generally takes places once a year, and that most commonly at the end of each financial year. In this all financial aspects of the company are inspected, and a follow-up audit may also be generated after the year end to compare results. 

Financial auditing is usually a systematic process, but in some cases, failures do occur.

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