Question

What an audit is, and why is it so important in organizations? Do you feel it helps in managing foreign operations?

Answer 1

Audit- Audit is the assessment or investigation of different books of records by an auditor followed by physical checking of stock to ensure that all offices are following documented arrangement of recording transactions.It is done to determine the exactness of financial statements provided by the company.Audit can easily be done internally by employees or heads of a particular division and externally by a firm of auditors or an independent one.

Audit importance in organizations:-

a)Having a powerful audit framework is significant for an organization since it empowers it to seek after and achieve its different corporate targets.

b)Internal auditors survey the structure of the internal controls and casually propose enhancements, and report any material abnormalities to empower further examination by the executives in the event that it is justified considering the present situation.

c)Auditors survey the risk of material misstatement in an organization's financial reports. In case of absence of a system of internal controls or an audit system, an organization would not have the option to make solid financial reports for internal or external purposes.

d)Audit professionals aaid the structure and change of internal control systems the purpose of which incorporates, in addition to other things,fraud prevention

e)Strong audit systems can lessen different types of risk in an enterprise, including its information risk , the risk of fraud and misappropriation of assets, and also the risk of suboptimal management because of deficient data on its activities.

Audit helps in managing foreign operations in following ways:-

• Operations processes for Sales, Purchase, Stocks and Others
• IT controls
• IFRS and all Accounting Standards unique to each country
• Laws and Regulations in each Country
• Anti-Fraud programs
• Management accounting and performance management