How do Auditing Firms Get Audited?

Wikipedia describes an audit as, An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements, as well as non-financial disclosures, present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. 

Auditors have to assess a set of company accounts to find out if they are the right representation of the company's affairs on the accounts date. The audit provides the comfort or assurance to the users of the accounts that an auditor or an independent third party has carefully examined the accounts and agrees with them.

How do Auditing Firms get audited?

In any big Audit firm, for example, an audit firm in Chennai, you will find there are "Audit Partners" and there is also a tax and advisorydivision. The tax and advisory along with all other non-audit lines of service are formed under the paradigm of Limited Liability Company (or equivalent). The audit practice will then be called "Partnership".

This stems from an age-old policy that Auditors, Lawyers, and Accountants should not have limited liability for providing wrong advice or assurance to third parties.

The current times dictates that most country legislation will still require an audit firm to be in a partnership with the audit partners. As it is a partnership you do not require a legal document to be audited.The partners, however, are required to provide for their personal income tax and are audited by the tax authority (IRA/IRS) personally.

Large audit firms get audited by the licensor of the firm's brand name such as individual KPMG, PWC, EY, and Deloitte have to follow some specific financial guidelines internally so that they can stick to the brand name, and hence these KPIs are under the scanner and monitored closely. However, it is in no way comes near to a full audit that some of the private companies face.

VRamaratnam & Company are distinguished auditors in Chennai that meet up to applicable reporting standards with perseverance. There are a number of by-products of the audit process such as finding out the internal management issues and other important insights that can cater to the present and future challenges too.

While some of the rules of the game stand transformed as of today some of the basic fundamentals remain unchanged.  The investor must add accuracy, completeness, and fair presentation of information in the financial statements and disclosures. The auditing process helps maintain the confidence of both the company and the financial system too. For the charteredaccountants in Chennai and the other cities of the country, the main challenge is keeping up with a fast-evolving corporate reporting environment.