Audit means accounting control, and it involves an external party reviewing and approving the financial conditions of a company. An audit is a way to determine if the annual financial statements or other aspects of a company have been carried out in accordance with laws and regulations.
The audit is carried out by an external auditor.
Which companies are required to undergo an audit?
All entities that disclose information, public corporations, and large proprietary companies are obligated by law to undergo an annual financial statement audit.
Companies are characterised as large when they meet two of the following criteria:
- A consolidated revenue exceeding $50 million
- Consolidated gross assets greater than $25 million
- 100 employees or more
How does an audit work?
An audit should be independent of the company, and the auditor conducting the audit should have no connection to the company. Therefore, the auditor conducting the audit is external.
There are no rules for how often you should undergo an audit in your company, but it is recommended to do it annually, especially when there are changes in the company. An auditor can also provide advisory services. This way, the company can be sure that the accounting and operations are carried out correctly according to laws and regulations.