When a company grows, the organizational structure becomes more complex, new financial challenges arise and operational requirements increase. In this context, independent auditing It now plays a strategic role: in addition to formalizing processes, it helps to increase transparency in accounting information and strengthens the organization's credibility with investors, financial institutions, regulatory bodies and other stakeholders.
For example, imagine a rapidly growing company that needs to demonstrate, to potential investors, that its demos adequately reflect the economic and financial situation. The performance of a Auditor independently examines records and procedures, offering greater confidence in informations presented and based on strategic decisions. To better understand the concept and practical applications, see also: “What is independent auditing: concept and application” and, for those considering hiring, “Benefits of hiring an independent auditor”.
The independent audit is carried out by impartial third parties with appropriate technical qualifications. The work of Auditor involves a detailed examination of financial statements And two accounting records, with the objective of evaluating whether they comply with applicable accounting standards and consistently represent the situation of undertaking. This process contributes to the reduction of risks, supports the prevention of frauds when identifying warning signs and helps reveal flaws in controls interns, especially for undertakings expanding that seek to attract investors or access more robust credit.
In a practical way, a service of auditing It usually follows steps such as:
- Planning and defining the scope, aligning expectations with management;
- Control tests and substantive procedures on balances and transactions;
- Risk assessment and documentation of findings;
- Issuance of a report with findings and recommendations for process improvement.
It is important to clarify the limits of this work: the audit offers a technical opinion on the statements and on compliance with accounting standards, but its scope depends on the scope contracted and the quality of the information and internal controls provided by the organization itself. To learn more about the concept and applications, see also:”What is independent auditing: concept and application”.
According to the report Vision 2035, from the Institute of Internal Auditors (IIA), organizations that carry out independent audits periodically are more likely to detect and correct financial problems at an early stage. The report mentions a statistically significant difference in early detection. The material reinforces the importance of the independence and objectivity of professionals, elements that increase the reliability of information and demos used by management and third parties in decision-making.
A study by Harvard Business School, through the “Audit Committees in a New Era of Governance” program, indicates that companies subject to auditing processes tend to have higher levels of governance and more stable performance in the long term. These findings suggest that the combination of auditing, effective committees, and robust internal controls improves risk assessment by investors and the credibility of the organization.
It is worth noting that the studies have specific scopes and methodologies; therefore, their conclusions must be interpreted in the appropriate context. In practical terms, imagine a hypothetical case: a undertaking identifies, during an audit, an error in revenue accounting that, if not corrected, could distort investment decisions. Early detection allows adjustments to financial statements, improved controls and greater safety for investors and other stakeholders.
For those who want to learn more about perusal of the effectiveness of auditing and to understand how these studies are applied in practice, see also “The effectiveness of independent auditing” and consider downloading an executive summary of the main findings to support internal evaluation processes.
A decisive aspect in the adoption of independent auditing is the regulatory environment. In more demanding markets, the observance of standards and specific laws ceased to be just an obligation and became a competitive differential. Companies audited by independent firms tend to have higher transparency Nas demos and greater credibility with investors, clients and others stakeholders, which can facilitate processes such as acquisitions, mergers, IPO, or international expansion.
In Brazil, the Joint-Stock Companies Act (Law No. 6,404/76) and the guidelines of CVM — Securities and Exchange Commission establish auditing requirements for companies of publicly traded. At the same time, many medium-sized companies have voluntarily adopted auditing as a professionalization stage, aligning their accounting and internal controls to the best practices in the market. For specific requirements and regulatory impacts, consultation with specialized legal and accounting counsel is recommended.
Finally, it is important to see independent auditing as a strategic investment capable of promoting the organization's sustainable growth. When well planned and executed, the independent auditing It contributes to increasing transparency Das demos And the trustworthiness of the information that supports management and market decisions, which tends to attract more qualified investors and clients.
Practical suggestions for preparing your undertaking before an audit:
- Review accounting procedures and organize registries and essential documents;
- Map critical internal controls responsible for each process;
- Document policies and evidence of conciliations and approvals;
- Align scope expectation with the Auditor and set realistic deadlines;
- Allocate necessary resources and involve leadership to ensure quick responses to requests.
It should be noted that the effectiveness of the audit depends on the contracted scope, the quality of the information provided and the internal collaboration; therefore, the responsibility for preparing and maintaining the controls is shared between the company and the contracted professionals. To learn more about the next steps, see:”What is independent auditing: concept and application“,”Benefits of hiring an independent auditor“and”The effectiveness of independent auditing”, or contact us for an initial assessment of the scope and services needed.
