Financial audit
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2 History 3 Steps 4 Biggest audit companies (often called Fat Four) 5 Audit Stakes |
Audit is usually done annually through 3 main steps.
The purpose is
Basic definition
Audit is the examination of records and reports of a company, in order to check that what is provided is relevant, and closest to the reality. That is to say, all assets and liabilities are properly recorded in the balance sheet, and, all profits and losses are properly assessed.
This assessment is done through 2 methods, by assessing internal control procedures and by checking the consistency of items in the books. (cf hereunder) History
Steps
Interim review
This is the first approach of the company. It usually occurs in the middle of the financial year. For instance, a company closes its accounts yearly on December 31, 2000. The interim audit will starts on June 2001.Hard Close
This audit precedes the closing date.
For a company closing on December 31, 2000, the Hard Close would occur on November 30, 2001.
The purpose is to audit all movements year to date.Final
This is the latest step of the audit, usually some weeks after the closing.
For a company closing on December 31, 2000, the Final would occur on January 30, 2002.
Thanks to the work already done during the Hard Close, only the remaining range between the date of the Hard Close and the closing has to be audited.
Biggest audit companies (often called Fat Four)
Audit Stakes