What is an audit?
An audit is an independent examination of the financial statements and underlying books and records of a company. The auditor will report back to the shareholders of the company.
Why have an audit?
In many cases it is a legal requirement for a company to have an annual audit. In cases where it is not a legal requirement directors may opt to have an audit.
What is an auditor?
An auditor is a member of a professional accountancy body who holds a specific licence to conduct statutory audit work. A holder of an audit licence will have passed a rigorous set of exams to become a member of the body and will then be subject to further training to become an auditor.
A CPA qualified auditor will be subject to checks and monitoring visits from professionally qualified staff from the CPA Institute to ensure their standards are of the highest quality. They must maintain their professional competence through continuous professional education throughout their career.
Auditors are bound by a strict code of ethics and must maintain their independence and integrity at all times.
What will the audit report say?
The auditor must reach an opinion on a number of factors whether or not the accounts show a true and fair view and whether the company has kept proper books and records.
Where the auditor reaches the option that the accounts do not show a true and fair view the audit report will clearly state this. If this situation arises, the audit report will contain specific details on the areas where the issue arose.
How do I choose an auditor?
When choosing, you must ensure that auditor is a “Registered Auditor”. This means that they hold an audit licence from a recognised accountancy body.
You can check with Companies Registration Office to ensure that your accountant is registered at www.cro.ie
How is the auditor appointed?
The shareholders of the company at the annual general meeting appoint/ re-appoint the auditor.
What rights and powers does the auditor have?
The auditor has the right to obtain access to the books, accounts and vouchers of the company and any other information that he thinks necessary to conduct the audit. The auditor may talk to your staff to obtain a good understanding of the company’s financial system. They may also write to third parties as banks and debtors to independently verify year-end balances.
What advantages can an audit have for my company?
An audit can deliver the following benefits:
The assurance that is derived from knowing that a professional auditor has reviewed the business, the company’s system and internal controls.
Lenders to, or investors in the business may require audited accounts as part of their terms and conditions.
When selling the business historical audited accounts may be required
As a consequence of the audit, your auditor is in a unique position to comment on the performance of your business.
What other obligations does the auditor have?
The auditor has a number of obligations as follows:
To make a report to the Office of Corporate Enforcement if certain breaches of the Companies Acts are identified.
Where proper books and records are not being maintained and the situation is not resolved the auditor must make a report to the CRO. This report goes on the public record.
To report suspicions of money laundering to the Gardai, and the Revenue Commissioners.
To report certain theft and fraud offences to the Gardai.
To report to the directors any material taxation offence they identify. Where the matter is not rectified the auditor must resign and notify the Revenue Commissioners.
Can I find out, in advance, how much the audit will cost?
Your auditor can explain the fee structure and how fees will be calculated. Your auditor’s letter of engagement will explain this. The fee will depend on the quality of business records available to the auditor.