Why Audits Are Crucial for Businesses

An audit, also known as an audit, is an essential corporate governance tool used to verify the accuracy of business processes. Many companies are required by law to have an audit performed on a regular basis to ensure that their financial reports and internal control systems are accurate and reliable. However, not only companies, but also public institutions and non-profit organisations regularly undergo this audit. But why is an audit so important and how does it work?

What is an audit?

An audit is a systematic process that examines a company's financial records, internal processes and overall control system. The aim is to ensure that business transactions are properly and transparently documented. An audit, as it is often referred to in an international context, can be carried out by either internal or external auditors. While internal audits are carried out by internal company employees, external auditors, such as auditors or specialised auditing firms, carry out independent controls.

Why do you need an audit?

The main purpose of an audit is to verify the correctness and completeness of financial reports. It also serves to ensure compliance with legal requirements and internal guidelines. An audit can also reveal weaknesses in internal processes that harbour potential risks. This increases the efficiency and transparency of business processes. In many countries, including Switzerland, companies are required by law to have their annual financial statements audited by an independent body in order to ensure the trust of investors, banks and other stakeholders.

When is an audit necessary?

An audit is usually conducted once a year, particularly in connection with a company's annual financial statements. However, in certain cases, such as suspected irregularities or special projects, special audits may also be necessary. Smaller companies may be exempt from the external audit requirement, but they still need to ensure that their financial records are in order.

Who performs the audit?

The responsibility for conducting an audit lies with either internal or external auditors. Internal auditors are employees of a company who regularly monitor internal processes and procedures. External auditors, on the other hand, are independent auditors, often certified public accountants, who are hired by the company to review its books and business transactions. In Switzerland, the audit is carried out by licensed audit experts who act in accordance with the provisions of the Swiss Federal Law on the Oversight of Auditors.

Conclusion

An audit is an indispensable tool for ensuring the correctness of financial reporting and compliance with regulations. It brings the following advantages: