After the setup of a company, the management needs to continually check and re-check the workings of the business to figure out if any fraudulent activity is going on. To cater to the verification is where the audit and assurance services come in.
An audit is the inspection of the overall workings of the business. The audit process may be conducted by an in-house department or a third party. They would usually perform a comprehensive and systematic examination of the books of accounts, records of the various transactions, etc. to provide an accurate and correct picture of a business. This would not only help in understanding the present situation of the company but also allow the management to plan for the future.
According to CAMA of Companies and Allied Matters Act, the shareholders of a company should vote to appoint auditor or auditors during the annual general meeting. The auditors in question should have a certificate stating that they are allowed to practice in the domain and should also be a member of the Institute of Chartered Accountants of Nigeria (ICAN, Nigeria) or the Association of National Accountants of Nigeria (ANAN).
It is a common practice of the Nigerian auditors to adopt the International Standards on Auditing (ISA) as are issued by the International Auditing and Assurance Standards Board (IAASB). The laws made by the local government further complement the guidelines. After every quarter, the auditor must prepare and maintain the books of accounts and the company audit report. After preparation of the stories, the auditor should mention their professional opinion as to whether the audit paints the accurate financial picture of the company or not.
Conducting an audit may lead you to discover specific information about the company which were previously unknown to you. Such information would allow you to focus on the affected area of the business properly. Performing an audit is not only beneficial for the management of the business but also advantageous for potential investors in the company. Some of the advantages of conducting a review in Nigeria are as below:
1. First and foremost, it would help in the identification of any outdated or inadequate accounting practices being followed in the business. Auditing provides a complete picture of the financial health of the business and also shows the various transactions conducted by it. The transparency would allow the management to understand the entire workings of the company and find out any discrepancy between reality and the expected outcome.
2. An audit will help in tax planning of the business. It will ensure that your company is prepared for tax season and would enable you to plan and leverage the various tax write-offs so that the company is benefited as much as possible.
3. It is not recommended that only a single type of accounting system is used for every company. By conducting an audit, we can gather the required data which would help us in using the right accounting system. The analysis would mean that there would be less number of problems in accounting and thus fewer errors would come up in the future.
4. The credibility of the company’s financial records will be strengthened. When the company has documented proof of all the activities of the business, the investors tend to put more trust in these companies.
5. It will help to prevent the occurrence of fraudulent activities in the company. An audit will help to pinpoint the fraudulent activity which would allow the management to take relevant remedial measures against such actions. A case further impartial is where the audit could be conducted by a reputed third party which would pass correct and unbiased judgement in case any fraudulent activity is found.
Due to the importance of conducting an audit and its various other benefits, conducting an audit is almost considered as a necessary function and has caused a sharp increase in the number of audit and accounting firms in Nigeria. If you are looking for help regarding the auditing of your company, then allow us to help you.
We at Business Setup Worldwide offer the following audit services in Nigeria:
● Review of financial statements
● Preparation of forecasts, projections, and cash flow analysis
● Compilation of monthly, quarterly and annual financial statements
● Auditing of financial statements to render an opinion
In case of any query do contact us, we would be happy to help.