Audit-The Accounts Therapy
As every human being needs to see a doctor regularly, a company also need to do so. It needs a special doctor-an auditor! For consistency and healthy lifestyle, the professional bodies have established some accounting standards and regulation so that every organization could remain healthy and deliver their best to the world.
The doctor is required to understand the patient before recommendation of medicine same the auditor is also required to understand the entity as per directions were given by International Standards of Audit.
When the draft of account statement is presented to the auditor, the first task of the auditor is to understand the company structure (ISA-315) and related backstage staff and for this purpose the auditor looks into the company’s X-Ray (i.e. the organogram), body temperature, heart beats and analyses the entity in such different angles as such a doctor looks into one’s eyes with a torch; whether the internal procedures are working as they are supposed to.
The top management of the company is like the heart of an organization while the directors act as the brain of the company. In order to understand the reason of its creation and objective, the auditor is required to examine the birth certificate of the company .i.e. Memorandum of Association and Article of Association.
If there is any disease affecting or will affect the entity significantly, the auditor may ask the entity to disclose it in the financial statements so that the stakeholders could remain updated about the current health status of the organization. This is what called the appropriate disclosure of company’s financial statement as per requirement of reporting frameworks. After looking into everything significant and obtaining professional satisfaction and by using professional skepticism, the auditor certifies that the company is healthy and good to go. The account statement is free from any material diseases and presents a true and fair view. The auditor shall keep ensuring that the required objective of creating a healthy corporate environment is being carried on throughout the life of the company. This ensures the going concern concept of the company.