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The Audit of Financial Statements

“Every time I make a mistake It seems to discover a truth that I did not know ” M. Maeterlinck.

“Every time I make a mistake
It seems to discover a truth that I did not know ”
M. Maeterlinck.

It requires adequate planning to achieve its objectives as efficient as possible. Like any other audit process, the focus lies in verifying, and given the case, detecting those correct or incorrect mechanisms that are part of the reality of the business, whether they appear in the books, as if they are not reflected in a way numerical It is normal, then, that the first objective of the auditor is to plan the audit so that it is done effectively.

the concepts of risk in audit

In the first place we want to define the concept of risk, since they will help us understand a little more the audit of financial statements.

Risk: A risk is an event that when materializing, can make a company or process do not meet its objectives.

Both companies and their processes must have defined objectives and strategies to achieve compliance. For the development of their activities, companies must aim at 4 objectives:

  • Strategic: high level goals.
  • Operational: Effective and efficient use of the organization’s resources.
  • Financial information: preparation and use of reliable financial statements.
  • Compliance: Everything that has to do with compliance with reliable norms and laws.

We identify 3 types of risks that can make a company do not meet its objectives:

  • Business risks: refers to all those factors that can generate that the company does not meet its objectives.
  • Fraud risks: factors that can generate fraud within the organization.
  • Process risks: they refer to those factors that may generate that the company’s processes do not meet their objectives.

planning function and opportunity

To be able to perform a good function and planning opportunity it is necessary: ​​

  • Focus work on important areas.
  • Solve potential problems in a timely manner.
  • Organize and administer appropriately, audit work so that it performs effectively and efficiently.
  • Attend in the selection of work team members, as well as reviewing their work.
  • Attend, when applicable, in the coordination of specialists to plan the audit.

It will be essential

how to perform an effective audit

Effective audit planning requires taking into account internal aspects and external aspects. It is necessary to detect significant business risks and its implications in the financial statements, in addition to determining the significant transactions recorded in the financial statements, thus detecting fraud risks and their implications in the financial statements.

In Verum, the understanding of the business is done from top to bottom. Whenever possible – we recommend it – we even take a tour of the physical facilities of one of our clients. It is important to analyze internal information, that is, statutes, manuals of procedures, policies, minutes, reports of the management to the Board of Directors, relevant contracts, correspondence with surveillance and control entities, correspondence with lawyers, Certificate of the Chamber of Commerce, etc It is also very important to analyze external information: magazines and newspapers, web search portals, databases, etc. Everything counts, never better said.

Another of the elements we have in Verum and that we believe that it can help an effective financial statements is to have a multidisciplinary team that can cover different optics within the process. With this, the process of definition of expectations will be easier and more enriching, and will also help validate the understanding of the business with management. It is important to have an analytical perspective and be involved with the client all year.


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