An audit is the examination of the accounting system of an organisation in order to give an opinion. An auditor is an individual who carries out the audit process. He or she gives an opinion on a particular subject matter. Auditors are financial gatekeepers. They ensure that financial reports published to users are in compliance with standards.
Key points explained
An audit involved an examination. This is not the regular examination you do in school. It involves certain processes. This starts with a plan. Then, research on the industry in which the company operates. Next, audit tests ensure the correct posting of financial transactions. This transactions must be line with the applicable financial frameworks.
The framework used to examine the subject matter of the audit depends on the type of audit. In financial statement audit, the international financial reporting standards (IFRS), local laws such as the CAMA Act in Nigeria are the basis of examination.
IFRS guides the preparation of financial statements. Therefore, the reports prepared by companies comply with the standards. CAMA (that is, the Companies and Allied Matters Act) contains specific guidance on financial statements reports. For example, CAMA states that Value Added Statement should be included in the financial statement. This is not specified in IFRS.
The opinion provided in an audit can either be qualified, unqualified or a disclaimer. Generally, an unqualified opinion is provided if the financial statement complies with all requirements.
The auditor is the individual who gives the opinion after a careful examination of the company’s accounting system. The opinion is provided through an audit report. To qualify as an auditor, the individual must have undergone rigorous training in accounting and professional certification and a minimum of three years of experience in an audit firm after he or she has qualified as a chartered accountant. One of such professional bodies is the Institute of Chartered Accountants of Nigeria.
Conclusion
An audit is the examination of financial statements to give a true and fair opinion. The auditor is the individual who carries out the audit process. To qualify as an auditor, you should have a certification from a professional accounting body such as ICAN. You should obtain three years of experience after the certification. Audit examination is not a school exam but a process that is guided by the International Auditing Standards (ISA).