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The Importance of Auditing, Explained (Infographic)

An audit is a management system done to check and evaluate the internal processes and financials of an organization especially in businesses. A business can either hire their own auditors, outsource them from companies who are experts in the field, or do both. Partnering with companies like Bywater, for example, you can enroll your co-workers to training courses designed to give them the knowledge, skill set, and framework in facilitating an internal audit.

Auditing

Business performance auditing, explained

To further elaborate, an audit is created to ensure that the business is going well through a thorough examination of all its internal processes. An audit’s goal is to steer and ground a business towards achieving its goals. This is because of the possibility that businesses could focus more on its day to day work that it veers away from the goals it has set out. To add to that, an audit is not an audit if it does determine the financial position of the company.

Aside from the fact that finances are integral in any organization, the financial position of a company is important because its stockholders deserve to be made aware of their investments.

Why is internal auditing important?

Auditing, therefore, is important for several reasons.

One, an audit checks on the correctness and accuracy of the financial statements of a company. Without an internal audit, errors in computation, judgement, and even encoding can be missed out. When these accumulate, the financial statements can give a misleading report on the all the transactions made throughout the year and its causes and effects too.

Two, an audit reviews the appropriation of the company’s finances. This means that it identifies where and how the money of the company was used to make sure that it is clear of manipulation and fraud.

Another reason as to why auditing is important is it reports whether or not policies were followed. To recap, the goal of an audit is to ensure that businesses reach their goals or are on the right track in reaching them. If policies made to reach the business’ goals are not followed and this is not reported, the business could go on and on without reaching anything.

An audit also helps in terms of giving recommendations when it comes to making policies and how they can be more effective and followed.

Lastly, auditing a company not only evaluates its finances, but it also assess the people working in it. An audit measures how each and every person in the company contributes to achieving the organization’s long-term goals and objectives. In short, it assess the effectivity and efficiency of the worker. Without this, the company might resort to just blaming technical errors and external factors when evaluating where they are at present in terms of their goals.

Takeway

As your takeaway, here’s the recap on the importance of auditing in the form of infographic; please share it around on social if you think your colleagues can benefit from it.

The importance of auditing - Bywater infographic

Further reading on internal audit

To learn more about auditing, here’s a list of resources to help you in getting started:

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