Financial audit explained by Hamid-Reza Khoyi
AUDIT HAMID REZA KHOYI - A company or entrepreneur must always be able to guarantee the economic stability and correctness of its actions. But the word alone is not enough, must also be put in place of real checks that confirm the veracity of what is reported. This operation has a name: Audit and Hamid-Reza Khoyi explains it to us.
What is a financial audit, says Hamid-Reza Khoyi
The audit is a financial check of the financial state of health of a company or a natural person. This practice takes its name from the Latin word "audit", which stands for "listening". Already in use in Ancient Rome, "it was meant to indicate the subjects who controlled the administration of public money through the audit of accounting results".
Today it is still in use but has expanded its functions. It is used to assess whether mandatory procedures are followed, whether the various roles and duties within the company are clearly defined and respected. The checks are valid for every type of company, from small to large, and for every degree of risk.
A financial audit shall consist of several stages culminating in the preparation of documentation establishing:
The subject of the analysis (company or private) shows that its situation is safe and stable.
This documentation is then made available to all interested parties to the subject of the analysis such as stakeholders, shareholders and banks.
The implementation phases of the Financial Audit
When approaching the financial audit, says Hamid-Reza Khoyi, it is important to respect three stages. Let’s look at them in detail.
Planning
This is the most sensitive phase, when all the audit activities to be carried out in the course of a year are planned. Yes, because the audit is a continuous process that must be periodically checked to check how the situation changes over time. Each intervention must:
- identify the objectives;
- analyse the risk for the identification of priorities;
- identify and formalise the activities being analysed/verified;
- in the absence of an internal provision, macro-mapping of process activities as well as risks and controls;
- define the necessary resources in terms of quantity and competence.
Collection of documentation
At this stage, the situation of the company or private auditees is perfectly identified and the actual process begins to be carried out, respecting the activities planned previously. For every moment it is essential to collect and carefully catalogue all the documentation provided so that you can have everything at your fingertips if you need it. Any action taken and checked must contain supporting documentation.
Verification of the veracity
The financial entities involved in the audit shall, at this stage, verify the veracity of the documentation collected. We then proceed to verify, for example, the transitions. If necessary, further documentation may be requested.
Report
Once the verification and documentation collection phase has been completed, a report can be drawn up, including the conclusions drawn from the financial audit. The final document will then be made available to all those interested in the subject of the transaction. It may be ordinary, if it relates to a single activity among the many planned, or final statement, if it relates to all the audit activity planned over a period of one year.
Hamid-Reza Khoyi warns against audit errors
When carrying out a financial audit it is necessary to be very accurate in the collection of documentation. In addition, this material must be accurate and verified, so that whoever gets hold of it must be able to reach the same conclusions as us. You should never be hasty in carrying out the analysis and archiving the documentation because:
"what has not been documented has not been verified"
