An audit is an independent examination of the entity’s financial information in order to provide an opinion on their truth and fairness.
The audit is very important to business and any entity due to the following reasons:
- It helps the owner of the business or organization to obtain reliable information on the financial performance and position of the business or organization. This is due to the fact that the auditor provides assurance on the credibility of financial statements.
- It may help in facilitating the loans and overdraft facilities from banks since banks require assurance on the truth and fairness of financial statements before issuing loans.
- The audit may help the business to obtain contracts from the government because many governments and their entities require businesses to submit audited financial statements during the tendering process.
- Audits help businesses to comply with laws and regulations since many countries require businesses to be audited annually.