Background:Business enterprise ABC is often a publicly listed business enterprise. They've hired their very own accountants to preare the financial statements, like: revenue statement, balance sheet, cash flow statement on a monthly basis.
Query:
So how does the public know in the event the financial statement ready by Enterprise ABC is proper and in compliance with accounting standard.
Financial audit:
This can be when the financial auditor can be found in and play a significant function, exactly where they evaluate the financial statemetnt close course of action of your Company's, evaluate the accouting treatment options and policies, and provide you with their very own opinion on the financial statement. The opinion of your auditor is irrespective of whether " the financial statement is fairly stated or not". "Fairly stated", in substance, implies that specific tolerable errors are expected.
Life devoid of auditor:
The financial statement ready by Business enterprise ABC may perhaps be ready on a improper manner/ not relative to accounting standard. Having said that, considering the fact that no competent personnel is conducting a examine on the financial statement, the inappropriate financial statement are going to be accepted by the public.
Consequence of life devoid of auditor:
An incorrect financial statement resulted in incorrect verdict getting created by financial statement user.
