Auditing is described as an activity that checks the records maintained by a company or government concerning the financial transactions that it makes. All organizations that use money that is invested by people other than those working in the organization must undergo auditing. This is the activity that assures people that the company is functioning properly and the money is being used in the right manner. It is not enough that the money is used properly, but it is also essential that the records of financial transactions are maintained accurately and is ready to be inspected by anyone. To ensure that companies function true to the interests of the investors statutory auditing is compulsory. Companies use the statutory audit services in Singapore to make it known that the records are being maintained properly.
The Purpose Of Audit By Statutory Audit Services In Singapore
As the name suggests the statutory audit is mandated by the government. All companies must conduct a statutory audit and submit the report if required. This audit is a compulsory inspection of all the financial records of the company to make sure that they are maintained properly. The audit aims at ensuring that the company is representing the actual financial position of the company. This is done by examining the various records maintained by the company. It includes the bank’s statements, bookkeeping records and the transactions done in the particular period for which auditing is done.
This legally required inspection of books is done to ensure that the company is running as per the laws of the land and the constitution of the company. It will also check whether the finances of the company are being used in the way that it is supposed to be used. Statutory auditing can easily find out any theft or fraud by the company. It is necessary to know whether the investors’ funds have been used for the betterment of the company and the subsequent benefit of the shareholders. Most public companies are subject to statutory auditing.
Knowing How Statutory Audit Is Conducted
The first thing that most statutory auditors will do is to go through the reports of the internal auditor. They will find out whether the recommendations and suggestions of the internal auditor have been adopted. They will see if the discrepancies mentioned in the report have been corrected and the system followed properly. The last year’s report will be studied thoroughly and their findings will be analyzed during the statutory auditing.
They will find out the procedures followed by the company when recording the sales and purchase of the company. This will be laid down by the accounts or audit department of the company. The external auditors will also understand what software is being used by the company to maintain the accounts. They will also find out the company’s policies regarding sales, purchases and other operations. The external auditors can start with checking random records and the supporting documents for the same. The auditors will also find out the method used by the company for approving expenses.
Inspecting the sales invoices and purchase bills is the next step. This is done carefully and ensured that all the records in this regard are properly maintained. The sales invoices and payments received will be counterchecked to see the accuracy. The bank reconciliation statement of the company is checked to see whether the statements are matching with that maintained by the company. The auditor will inspect the bills for various assets that were purchased in the financial year.
What Are The Benefits Of Statutory Auditing?
The main purpose of a statutory audit is to satisfy the government and abide by the law. Apart from this, a statutory audit improves trust in the company. The public and other interested entities can rest assured that the financial statements and reports of the company are correct and can be trusted. It is also an activity that ensures that the company is following the non-statutory requirements like corporate governance requirements. For companies with poor internal controls, a statutory audit will push the company to adopt better methods for the efficient functioning of the company.
Audit Services Provided By Auditing Companies In Singapore
Many audit services are provided by firms. The statutory audit is the main activity which is required by the law. This audit assures the government and the vested parties that the company is functioning as required and maintaining proper records. The statutory audit is compulsory. The other audit services provided are the internal audit and the special audit.
Internal audit is conducted to assess the systems which are being used in the company for the maintenance of financial records. It helps the company in improving risk management. The company can improve internal controls. The internal auditors work closely with the management of the company in finding out the working of the company and how it can be improved for better results. The purpose of internal auditing is to find out discrepancies and correct them before they become problems that are beyond control.
As the internal auditors are independent, they can make an unbiased assessment of the company’s systems and performance. This will help them to give a correct opinion about the processes and procedures adopted in the company. They can guide the management in the proper use of all resources. They can also make suggestions about reducing expenses and making the company more profitable. Internal audit also helps in improving risk management and ensure that companies function well. Internal audits will also help the company to improve its monitoring and control systems.
A special audit service is provided for the management to know where there are improvements needed. This audit only focuses on certain key areas to provide insights to the company management about how they are operating and how they can make the operations better to earn the trust of the investors. Hiring good audit services can help the company to perform much better. They can help in pointing out the mistakes and suggesting ways to improve.