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Audit of financial statements (IFRS)

Audit of financial statements is the examination of financial statements in accordance with International Standards of Auditing (ISA). It can be conducted either internally by employees of organization or externally by outside company. We offer a wide range of audit services, including audit of financial statements prepared in accordance with International Financial Reporting Standards (IFRS), Generally Accepted Accounting Principles (GAAP), National Accounting Standards (NAS) and other applicable reporting standards.

Audit of financial statements is compulsory for some organizations. For some jurisdictions, audit is a legal requirement for preventing incentives towards intentional fraud commitment by misstating financial information.

Audit of financial statements has some main objectives:

• To evaluate whether the financial statements are materially correct, complete, and reported in accordance with relevant framework;
• The detection of fraud in the company;
• To evaluate whether the organization will remain a viable business, also known as a going concern.

Audit of financial statements has following importance:

• it provides assurance to investors. As investors are not participated in day to day operations,they need information which is free from material misstatement and reliable.
• it provides consistency in financial statements that beneficaries can use when analyzing company and in decision making process.
• it highlights key areas which management may implement control procedures in.

Audit of financial statements may differ for public and private companies. Although all companies produce financial statements regardless of size, audit of larger public companies are more complex and used by more market participants. Beyond that, there are may be additional legal requirements which public companies must comply when preparing financial statements.

Audit of financial statements has 4 important phases:

1) Engagement:

Before performing the work, auditors should discuss the key terms and conditions with its customers. Auditors should also do a pre-analytical review and client due diligence at this phase to see whether the firm is capable of handling the audit.

2) Planning:

Planning of an audit engagement is important. During this phase, the auditor can consider which audit approach to pursue, allocate resources, and understand the client's environment and internal controls.

3) Execution:

Audit Execution is where the auditing takes place. Before starting, the auditor is presented with all relevant information regarding the audit. Auditors may examine inventories stored in the client's warehouse and participate in annual inventories counts.

4) Reporting:

Reporting is the final stage of the audit process. During this phase, auditors produce report that represents their audit observation and conclusion.