All about audit and assurance

Companies are made up of different individuals. For instance, it has the shareholders or owners and then the managing staff. In most cases shareholders tend to have very little involvement on the day to day functioning of the business. This is why audit and assurance is highly important to companies. It helps the shareholders find out how the company resources are being used. One of the main advantages of this is that theft or improper use of resources will be highly avoided thus leading to increased profits. With the financial statements provided by the auditors, the shareholders will be able to make the right financial decisions regarding the business and the company. These are some of the main advantages of auditing as a whole.

Audit and Assurance

The report provided by the auditors creates a form of confidence on the financial statements. The conclusion achieved by this reports is what can be referred to as assurance. It is important to note that there are different categories of assurance depending on the category of the officer or business. Some of the main categories include;

  • A reasonable assurance- this form of assurance tends to get into deep detail in assessing the company. It tends to do a detailed testing before coming into a conclusion. This is the type of assurance that most big companies tend to go for. It tends to review the audit statements.
  • Limited assurance- this form of assurance tends to review the financial statements. It does not get deep into detail compared to the prior form of assurance. It just deals with primary analysis and enquiries.
  • No assurance- this is a lesser form of assurance that deals with the compilation of the financial statements. These are the main categories of assurance in the accounting industry.

When it comes to auditing and assurance it is highly important to take into consideration the type and level of auditor that the company opts for. For large organizations, it is highly advisable to opt for auditing firms. The reason behind this is that they tend to get into deep detail in all the various sectors. Apart from that, documentation from renowned auditing firms tends to create a positive image about the company. It shows that you provide quality services to its clients. It may take a while to find the best type of auditor for the job but in the end it will always prove worthwhile.