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:

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"

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With Hamid-Reza Khoyi discovering trust services

HAMID-REZA KHOYI TRUST SERVICES - For individuals or companies it is increasingly important to have financial, banking and insurance services capable of safeguarding and protecting their assets. Not only is it also important to make it easier to set up a new company, that’s why there are Trust Services that explains Hamid-Reza Khoyi.

Hamid-Reza Khoyi introduces trust services

The trust is a legal instrument that, in the interest of one or more beneficiaries or for a specific purpose, allows to structure in various ways "legal positions" based on trust ties. Trust services are a series of services used to apply or implement the trust. It includes the domiciliation of companies, requests to reside in a company board, the safeguarding of the company assets. It is mostly about services rendered to a corporate client, but they can also be applied at a family level.

The protagonists of trust services are two entities: the settlor, the one who requests the service of the trust; the trustee, the person who, like Hamid-Reza Khoyi, is in charge of operating trust services. Often today the services of trusts not only monetary, but also real estate, such as buildings, financial files or participations of company shares. In any case, when they are transferred to the trustee they do not become its property, but are only safeguarded and managed by it.

At present, more and more people rely on trust services to protect their personal assets and make them separate from corporate or corporate assets. Entrusting them to a trustee in fact, the assets become impregnable, and are defended against any consequences related to a risky professional activity by the settlor or inappropriate personal behavior. The same applies also in case you pass to the trustee and assets related to the company.

The professionals of the sector

The trust services available today are mostly: domicile, shielding, privacy protection and the creation of real financial trusts to solve, for example, succession problems. To manage this type of operation it is very important to rely on a professional, and that this is recognized as such. In fact, an expert can guarantee the protection of privacy and give an advantage to the initiation of certain activities, such as the foundation of a start-up. The trustee is not a nemesis of the settlor, who thinks only to get hold of his assets,  but a legal figure whose purpose is to safeguard the interests of his client.

As part of the Digital Trust Services - of which Hamid-Reza Khoyi speaks in the next paragraph - the professional reference figures, called Trust Services Providers, are recognized at the level of the European Union and Switzerland. It is a person or legal entity that provides and preserves digital certificates to create and validate electronic signatures and to authenticate their signatories. To be recognized as such, their names must appear on an official list.

Introduction of Hamid-Reza Khoyi to Digital Trust Services

As Hamid-Reza Khoyi has already anticipated, there is a particular class of trust services. These are the Digital Trust Services that according to the definition given by Article 3.16 of the Regulation eidas are:

Having this kind of service is fundamental for today’s society given the direction and strength with which the Digital Transition is being imposed. More and more operations of any kind are carried out exclusively online and remotely. Not only does it increase the demand of customers for digital services that can facilitate many activities. However, it is important to make these exchanges transparent and safe, so more and more digital trust services providers are recognized and certified. Their presence in transactions gives more weight to the digital trust services carried out and makes them even more legally unassailable, compared to those not mediated.

Want to know another financial instrument? Discover KYC

Know your client: Hamid-Reza Khoyi introduces the topic

KNOW YOUR CLIENT HAMID-REZA KHOYI - Investing is not so easy, as it is not easy for those who manage the client portfolio to be aware of the person’s history and his money. In order to do their job properly, advisors need to know as much as possible about investors in order to make the most of their money. To do so they have a number of tools including the "Know your client, let’s discover it together with Hamid-Reza Khoyi.

Know your Client: what is it?

The Know your Client is a tool used to verify the identity of a customer and assess potential risks or illegal intentions in the relationship with the customer. Investment advisors, for example, use it to ascertain the financial situation of their clients and that this is not included in the "black list" or otherwise. This tool is also useful for auditors for whom it is called "Understand your Business". In general, the fields of application are many.

There are three steps in the KYC procedure:

At this stage, all the basic information of the assisted person is collected through the compilation of the primary documents. It therefore requires all the user’s personal data and occurs through the use of credentials such as name, date of birth, address, or other documents. At this stage, the modern screening tools of the customer made available by the modern Fintech are also available.

At this point the customer’s identity is verified and the risk profile is evaluated using the user’s credentials collected. The legal nature of the client, the activity mainly carried out, the geographical area of residence are thus verified.

Performing KYC only in the client’s cognitive phase is not enough. There must be continuous monitoring over time to verify that the information collected initially continues to be valid and that the user behaves correctly over time.

Know your client: Hamid-Reza Khoyi tells you who you are interested in and how to use it

The Know your Client is a freely usable tool in the business world, but there are figures who have the obligation to implement it. These are banks, financial intermediaries, trustee, and industry professionals.

These figures have at their disposal many management technologies to do it at their best. There are directives that require you to prove that you have the software for testing KYC, but everyone is free to adopt the most appropriate degree of depth. Of course, the more you think the customer is a potential risk, the more convenient it is to do a more in-depth analysis.

Important tool to support anti-money laundering

As we have seen, it is a very versatile tool that affects several fields of application, but the first purpose for which it is designed is to support the battles of money laundering. The necessary practices to ensure that illegally obtained money can be used legally, such as insurance fraud, are unfortunately difficult to detect, but the Know your Client, as Hamid-Reza Khoyi says, is an excellent ally.

Now that most operations can easily take place online, adopting KYC becomes more and more fundamental.

Know your customer, the prospects for the future projected by Hamid-Reza Khoyi

The market offers numerous KYC implementation solutions including a wide range of artificial intelligence algorithms that can implement research processes and speed them up without losing efficiency and safety. The future that is slowly showing us technology allows us to look very far ahead.

"Maybe one day the technology will amaze us so much that even the Blockchain can be a useful tool for the Know your Client" - says Hamid-Reza Khoyi.