Good practices What is a financial audit and how is it done?

A financial audit is an independent and objective examination of financial statements, the purpose of which is to confirm that the data presented by the company is reliable, compliant with applicable legal regulations, and it reflects the actual financial situation of the company.

A reliable audit increases the trust of investors and contractors, confirming financial credibility and the quality of reporting. For many companies, it is not only a legal obligation but also a key element in building reputation and transparency towards stakeholders.

The financial statement audit process consists of several clearly defined stages. Each stage aims to ensure the accuracy, compliance with regulations, and credibility of the presented data.

1. Planning the audit
Initially, the auditor develops a detailed financial audit plan, analyzing the specifics of the company’s operations, assessing risks, and the scope of work. This stage defines the procedures, schedule, and resources necessary to conduct the financial statement audit.

2. Internal control assessment
The auditor examines the internal control system, i.e., the company’s financial processes and safeguards. Assessing their effectiveness allows us to determine the degree to which internal oversight and accounting mechanisms can be relied upon.

3. Verification of financial documents
This is a key stage of the audit, during which the auditor analyzes accounting records, invoices, balance confirmations, contracts, and other financial documents. The goal is to confirm that the data in the financial statements is consistent with reality and applicable law.

4. Financial reporting analysis
The auditor performs a detailed review of the balance sheet, profit and loss account, cash flow statement, and notes, verifying their compliance with international accounting standards and the Accounting Act.

5. Preparation of the research report
Finally, the financial auditor prepares a report on the audit of the financial statements, containing an opinion on whether the statements present a true and fair view of the financial situation and financial result of the company.

A professionally conducted financial audit helps detect irregularities, streamlines reporting processes and increases investor confidence in the company.

The final result of a financial audit is a financial statement audit report prepared by a certified auditor. This document provides a detailed assessment of whether the financial statements were prepared in accordance with applicable regulations and accounting standards, and whether they fairly present the company’s financial position and results.

The report includes, among others:

• Audit opinion (unqualified, with qualifications, negative or refusal to issue an opinion)
• Description of the audit procedure carried out
• Information about the scope and legal basis of the study
• Conclusions regarding the report’s compliance with legal provisions

This form of data credibility confirmation is essential for investors, financial institutions, and regulators. A transparent audit report strengthens trust in the company and provides evidence of the reliability of its financial reporting.

What is a financial audit?
A financial audit is an independent examination of financial statements carried out by a certified auditor to confirm that the financial data presented by the company are reliable, compliant with applicable regulations and reflect the actual financial situation of the company.

How to speed up the financial audit process?
To expedite financial audits, many companies are choosing to utilize a VDR system. This online platform allows for centralized and secure management of access to extensive financial documentation, significantly streamlining the process.

What is the financial audit process?
The financial audit process includes planning, risk analysis, review of financial documents, and assessment of internal controls. It culminates in the issuance of an audit report that confirms the reliability and accuracy of the company’s financial data.

How long does it take to audit financial statements?
The duration depends on the size of the company and the complexity of its operations. For medium-sized companies, an audit typically lasts from a few weeks to 2-3 months.

What happens if the audit reveals discrepancies?
If the auditor identifies errors or discrepancies, they are required to indicate them in the audit report. The company’s management should then take corrective action and amend the financial statements.

What are the benefits of a financial audit?
A reliable audit increases a company’s credibility, supports strategic decisions, allows for early detection of irregularities in accounting records, and builds the trust of stakeholders and financial institutions.