Earlier time, the companies completely depended on the accountants of the audit firms for checking the accounts, financial entries in different books, and keeping the financial record. However, small companies eventually lacked the level of sophistication for managing finance.
For them, it is an obvious choice to rely on the audit firm that makes sense to the competence and cost control.
However, in the last decade, the importance of Auditor in Delhi has increased much. If you own a business and want to hire the auditor, then you must know the exact roles and responsibilities of them.
What do the auditors do?
When you hire an auditor from a firm, then he/she can render an opinion on the financial statement of the company. They observe and compare whether all the financial matters are reported and presented in a fair manner.
For that, they have to gather sufficient and appropriate evidence along with tests, observation, and comparison to confirm reasonable assurance. Then only they find out whether the financial statements are honest, free of any miscalculation or there is the scope of fraud or error.
In the auditing process, the Auditor generally does the following things:
• Make an inquiry of the management and others to have an understanding of the whole organization, its financial reporting system, and any previous error or fraud.
• The evaluation of the internal control system
• To perform the analytical process to check the account balances, transactions, and cash flow in the organization on expected and unexpected variances
• Check all the documents that support the existing account balance or transactions
• Observation of the physical inventory count
• Confirmation of the receivable accounts along with other accounts with the third party
Apart from all these, the auditor may offer advice to improve the present financial reporting along with the internal control in order to maximize the performance and efficiency of the company.
What are the things that the auditor doesn’t do?
To get a clear picture of the roles and responsibilities of the external auditor, you must know the things that you should not expect from them.
The first thing, you have to keep in mind that, there is no responsibility of the auditor on the financial statements on which they have to provide an opinion.
As the auditors are not part of the management, there are certain things that they cannot do.
• They cannot authorize, execute, and consummate any kind of payment on the client’s behalf.
• They cannot make any changes to the source documents.
• They cannot make any assumption of the client’s asset like maintenance of the banking account
• The auditor cannot establish an internal control like constant monitoring activities for the client
• They cannot make any report to the board of directors on behalf of the management.
• They cannot supervise the performance of the client’s employee of normal activities
• They cannot perform the duty as the stock or escrow agent or general counsel of the client
• They cannot sign any payroll tax returns for clients.