An audit is the highest level of assurance that financial statements present fairly about the entity’s financial position, results of operation, and cash flows in accordance with the country’s generally accepted accounting principles or another basis of accounting. An audit is appropriate for businesses that must offer a higher level of assurance to outside parties. The financial statements will be examined, accounts will be confirmed with third parties, physical inspections and observations will be conducted, and testing will be performed on selected transactions through the review of supporting documents.
How Does Audit in Georgia Work?
Audit services in Georgia must be performed in accordance with the International Standards on Auditing (ISA), and the audit must be conducted according to the procedure specified in Article 6 (1) of this law or based on the entity’s initiative. The audit opinion is validated by a signature of an engagement audit partner and/or a person authorized by an audit firm. The internal procedures of an audit firm shall make it possible to identify an engagement partner. An Auditor/Audit Firm, after carrying out the necessary services in a company, must keep the documents prepared and used in the course of an audit (in an electronic form as well as hard copies) for 6 years following the end of the respective reporting period.
In Georgia, the State Audit Office (SAO) is the supreme audit institution responsible for performing an audit. The general goals of the activity of the SAO involve promoting efficient and effective public spending, to protect the national wealth, property of the state of autonomous republics and local (municipal) entities, and to improve management of public finances.
Benefits of Audit Services in Georgia
The primary objective of auditing is to provide an independent opinion on your company’s annual accounts. There is a range of benefits of availing auditing services in Georgia. Some of them are as follows:
1. Risk Awareness
Risk plays an important role in many businesses, regardless of the business activity or its size. Owners are required to take an active role in managing all types of risks, from strategic to regulatory, operational to financial. And performing an audit can be the perfect platform to do this, providing assurance that correct systems are in place to handle any potential risks that may arise.
2. Identifying Weaknesses
An audit helps in identifying any loopholes in the accounting system and enables the company to suggest improvements. The auditor can help the company in informing the areas/situations where advice is helpful.
3. Provides Validity
With the help of auditing services, the company will get an object of opinion on the small business accounting process. There are many business owners who do not have enough business knowledge in monetary terms like understanding the accounting principles. Professional accountants can review this information and provide business owners with insight on the accuracy and validity of the accounting information. Valid accounting information can help the business owner’s secure external financing from lenders and investors.
4. Limits Legal and Tax Issues
Auditing services will provide business owners with information on the legal and tax issues relating to the audit information. Legal issues arise when business owners provide inaccurate or fraudulent auditing and assurance information to lenders, investors, and the general public. It will also increase the company’s tax liability. Hence availing the services will help the company in limiting the legal and tax issues.
5. Advice on Financial Benefits
An audit facilitates the provision of advice that can have real financial benefits for a business, including how the business is running, what margins can be expected and how these can be achieved. Advice can cover anything from the tightening of internal controls to reducing the risk of fraud or tax planning.
The aforementioned benefits may help you in becoming self-aware and realizing that it is a high time that your company needs proper auditing services done. But there are few who still ask the importance of conducting auditing services. Well, to answer it simply, it is important because banks, creditors, and outside investors are not going to completely trust the financial statements produced by the company’s employed accountants. There is a conflict of interest because the company will tend to show better results on their income statement and balance sheet compared to actual results. That is why the company hires an auditor to perform the services and provide reasonable assurance that the financial statements are materially free of misstatements due to error, fraud, etc. This doesn’t mean that the financial statements will be perfect but provides an opinion that the amounts are not so far off that they would affect a decision made by a stakeholder.
We at Business Setup Worldwide offer the following auditing services in Georgia:
- Auditing of financial statements for the purpose of rendering an opinion
- Review of financial statements
- Compilation of monthly, quarterly and annual financial statements
- Preparation of forecasts, projections, and cash flow analysis
Our advisors in Georgia are here to help you solve all your financial concerns. Contact us today – we’d be happy to assist you.