What are the Objectives of Auditing?

What is Auditing?

In layman’s terms, auditing is the process of examining a company’s books and records to ensure that all transactions are correctly recorded. Auditing is a tool for detecting errors in a company’s books of accounts. To make the whole examination unbiased, the auditing is often conducted by an independent person who is qualified according to UAE law for the auditing. It can be done by an internal employee, but it is always preferable to entrust it to a third party. Businesses conduct audits at regular intervals, but it is not required for all types of businesses.

Auditing Objectives

The auditing is aimed at a number of goals, including:

1. Internal Controls Accuracy

 Through thorough examinations and assessments, auditing assists in maintaining the accuracy and effectiveness of the organization’s internal controls.

2. Financial Transactions Verification

The primary goal of auditing is to double-check all of the financial year’s records, including ensuring arithmetical accuracy and verifying all account balances.

3. Transaction Authentication

Using supporting documents and proofs, the steps include ensuring the authenticity and validity of all transactions.

4. Segregation of Expenses

Auditors verify that a clear distinction has been made between capital and revenue expenditures in the records of financial books.

5. Asset/Liabilities Existence

The auditor double-checks the assets and liabilities listed on the balance sheet to ensure that they exist and that their values are correct.

6. Compliance

The auditor ensures that the company complies with all regulatory bodies’ rules and regulations.

7. Financial Statement Opinion

The auditor’s accurate and reasonable opinion on the financial statements is one of the most important aspects of an audit.

8. Errors Detection and Prevention

Auditors look for errors caused by carelessness, mistakes, or a lack of complete information as part of the auditing process. Several types of errors are identified, and auditors look for controls in the organization to prevent them from happening again.

9. Fraud Detection and Prevention

Auditors look for intentional errors committed by anyone as fraud for personal gain; fraud includes misappropriation of cash or goods, as well as account manipulation. It is the responsibility of an auditor to detect and prevent such frauds.