Auditing is carried out by teams of staff headed by qualified accountants who are independent of the business. Essentially, auditors check that the financial statements, prepared by management, give a true and fair view of the accounts.
Auditors are inspectors in accounting to find mistakes and misleads !
Auditing is normally associated with company accounts. However, the tax authorities or the bank may request an audit of the accounts of sole traders or partnerships.
For banks it is very important to know about true financial position of loan receiver to be sure he could pay loan installments on time. therefore, auditing is one of the best way to check financial status any loan requester very well.
For companies, auditors issue an auditor’s report annually to shareholders. This is issued after a thorough examination by the auditors of the accounting records and systems of the company.
Charge of Auditing
Auditors charge management an audit fee. sometimes they will charge 5% to 10% of total financial capital of a company. For example, KPMG, a firm of auditors, charged HSBC Holdings 11.4 million in 2004 for auditing and consultancy services.