What is Amalgamation?
An audit is the examination of the financial report of an organization - as presented in the annual report - by your Chartered Accountant independent of that organization. The financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes.
The purpose of an audit is to form a view on whether the information presented in the financial report, taken as a whole, reflects the financial position of the organization at a given date.
When examining the financial report, auditors must follow auditing standards which are set by a government body. Once auditors have completed their work, they write an audit report, explaining what they have done and giving an opinion drawn from their work. Generally, all listed companies and limited liability companies are subject to an audit each year. Other organizations may require or request an audit depending on their structure and ownership.
The organization’s management prepares the financial report. It must be prepared in accordance with legal requirements and financial reporting standards.
The organization’s directors approve the financial report. Auditors start their examination by gaining an understanding of the organization’s activities, and considering the economic and industry issues that might have affected the business during the reporting period. For each major activity listed in the financial report, auditors identify and assess any risks which could have a significant impact on the financial position or financial performance, and also some of the measures (called internal controls) that the organization has put in place to mitigate those risks. Based on the risks and controls identified, auditors consider what management does has done to ensure the financial report is accurate, and examine supporting evidence.
Auditors then make a judgment as to whether the financial report taken as a whole presents a true and fair view of the financial results and position of the organization and its cash flows, and is in compliance with financial reporting standards and, if applicable, the Corporations Act.