Finance Wanted.

By Sarah Gillies

An audit is an evaluation of a person, organization, system, process, project or product. An audit would be performed to determine the strength and reliability of information.

A company will perform a financial audit to prove that its financial statements truly represent its position in the market and to assess the fairness by which a companys financial statements are presented by its management. It is designed to reduce any possibility of missing or false information, whether simply by error or by fraud. Different countries have different audit options as do different firms and organisations.

A financial audit is usually performed once a year before a company releases its financial statement. Internal audits are performed by employees of the companies so that they can easily find out any problems. External audits are independent staff assigned by an auditing firm to evaluate financial statements. Most external auditors are employed by accounting firms once a year for their annual audit.

There are 4 stages of an audit: Planning and risk assessment, Internal controls testing, Substantive procedures and Finalization.

Planning and risk Assessment

The planning and risk assessment starts by understanding what the business does and how it operates and the work out any possible risks. Internal controls testing. The next stage is internal controls testing which includes checking computer security, account reconciliations and how many people are needed to complete tasks. The stronger the internal controls are the easier this is for the auditor.

Substantive procedures

The Substantive procedures stage collects evidence that the figures made in the financial statement are reliable. Auditors rely on this stage when the internal controls are strong.

Finalization

The last stage of the audit is used to compile a report to the managers of the company which detail any important matters/issues that have come to light during the audit.

There are now tools that have been developed to perform audits using a computer. When a human being is performing an audit it is very difficult to view and record every single document so they view only a sample. A Computer Aided Audit Tool (or CAAT) can analyse large volumes of data looking for anomalies. Unlike a human being it can review all transactions, test all the data and look for duplicate transactions. They can test 100% of the data rather than just a selection.

The four largest accounting firms in the world are often referred to as 'the Big Four'. They are: PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte.

Auditors need to be 'people people' as they will often be working with a large team of auditors. Risk management is a very important part of the job and as an internal auditor, you may well be the person in the best position to see new opportunities or note areas of danger to your firm. You'll also have to be completely trustworthy as you'll be looking at a lot of highly confidential information. You'll also need to be willing to continually learn and develop as new regulations and standards are always being introduced. An auditor who keeps up with the emerging standards and then puts them into practice will be highly sought after. You need to be able to write your recommendations in an easy to follow and clear way because the people that read these audits are not specialist in risk management and accounting and they need to be able to understand it.

If you are an auditor or think that you may have the skills to become an auditor there are many options available to you to study and look for an auditing job.

Sarah writes on behalf of Careers In Audit, the world's leading job board for audit professionals. http://www.careersinaudit.com/Home/Home.aspx