Find out about the Financial Statement Audit

A financial statement audit is all about examining the entity's financial statements and helps to accompany the disclosures all with the help of the services of the independent auditor. It results with a report submitted by the auditor, and it offers a fair presentation of the financial statements and other related disclosures. The auditor's report made by the chartered accountants in Chennai and other cities of the country should come with the financial statements when they are given to the intended recipients.

The chief objective of a financial statement audit is that it offers financial credibility to the reported financial position and also according to the performance of a business. The Securities and Exchange Commission says that all the entities that are under public domain must file annual reports with the ones that are audited. Similarly, lenders typically require an audit of the financial statements of any entity, which they have to lend. Suppliers also require audited financial statements before they extend trade credit (though that happens only when the amount of requested credit is a substantial amount. 

Know all about the primary stages of audit here, 

1. Planning and risk assessment. Besides understanding the business and the environment where it operates, they use this information to assess whether the risks involved and how it will affect the financial statements.

2. Internal controls testing. This helps the assessment of the effectiveness of an entity's suite of controls, which helps focus on the areas as per proper authorization, the safeguarding of assets, and also segregating of duties. This involves the array of tests, which is conducted on a sampling of transactions helping it determine the degree of control effectiveness. A higher degree of effectiveness helps the auditors to control some of the audit procedures. If the controls are not very ineffective (there may be a high risk of material misstatement), then the auditors must find out about other procedures to find out more about the financial statements. There are a number of risk assessment questionnaires available that helps with the internal controls testing.

3. Substantive procedures. This involves a broad number of procedures, a glimpse of which are the following,

• Analysis.
• Cash.
• Marketable securities
• Accounts receivable
• Inventory.
• Fixed assets.
• Accounts payable.
• Accrued expenses.
• Debt.
• Revenue.
• Expenses.

An audit made by the auditorsin Chennai and the other places, definitely one of the most expensive examinations of financial statements. The least expensive is said to be a compilation and the next one is a review. Due to its cost, many companies try to downgrade to a review or compilation, though this is only a compilation which you can follow if it is acceptable to one of the report recipients. Publicly held entities are required to get their quarterly financial statements reviewed apart from the annual audit.