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An auditor is an accountant who specializes in analyzing a business’s financial records for accuracy. This is a vital service. Every business can benefit from a periodic audit. Hiring or contracting an auditor to look over the records helps to save money and eliminate inefficiency.
When performing an audit, an auditor or auditing team will request access to the business’s financial records. This includes the ledgers, lists of receipts and expenditures, bank balances, records of physical assets owned or leased and many other records. The auditor will also interview personnel and review the business’s accounting system, in particular its internal controls. In essence, the auditor will review any activity that affects the business’s finances. An audit will usually take a few days on-site at the business’s offices to ensure a comprehensive analysis.
An auditor can’t guarantee 100% accuracy. A business simply has too many financial transactions, and the work hours necessary to comb over every transaction and compare it to the business ledger aren’t cost-effective. Instead, an auditor takes a representative sample of the year’s transactions and expresses an opinion whether they accurately reflect the business’s financial statements. An unqualified
opinion means that the auditor considers the statements accurate. A qualified opinion means that limited discrepancies exist, and will identify them. An adverse opinion indicates that the statements misrepresent the business’s financial position, but these are very rare; auditors are generally able to advise business owners and managers on the best way to revise their records to improve accuracy and meet generally accepted accounting practices.
It is best practices to schedule an external audit at least once a year, usually when the business prepares its year-end financial statement. This will give the auditing team the most comprehensive look at the business’s finances, ensuring they can provide the best service.
In addition to external auditors, a business might find it beneficial to hire one or more internal auditors. Internal auditing is similar to external auditing, except that the auditors are employed directly by the business they service. Internal auditors are able to work with a business’s day to day finances and usually report directly to the business’s upper management. A business that both employs internal auditors and periodically contracts external auditors can be assured that its financial statements are accurate and that operations are running smoothly.