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Why is auditing important?

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Quick Answer

An audit plays a valuable role for companies and charitable organizations to maintain integrity and attain specific goals, as stated by The Houston Chronicle. A wide range of business concerns benefit from an unbiased audit.

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Why is auditing important?
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Full Answer

An effective audit helps organizations achieve goals and objectives by measuring overall performance and productivity, as detected in transactions and business records, according to The Houston Chronicle. Further, an audit protects an organization from financial misstatements, presenting a reliable health picture of the organization to the markets. Fraud protection is a benefit of audits achieved through internal controls that prevent and detect accounting irregularities. Strengthening the financial integrity of an organization through an audit reduces risk and the cost of capitol.

According to True and Fair, an audit confirms the financial claims as stated by an organization in various ways. An audit provides investors and shareholders confidence by providing trusted information concerning financial statements and how well the organization is run. An audit inspects internal control systems, ensuring they are sufficiently strong and working properly. In addition, an audit benefits accountants and tax collectors by addressing accounting problems and offering up-to-date information on techniques, rules, and regulations. Finally, financial analysts use an audit to determine the value of an organization's shares.

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