Audits

Auditing is essential for any business. It ensures that the financial records are accurate. It is vital for various reasons, such as providing that there is no fraud or errors in the business. Tax agencies also use files from audits to calculate the tax that a business is required to pay. Some financial institutions also require reviews to give organizations loans (Chen, Li, & Chi, 2016). Different types of audits suit different needs in a company. The following is an analysis of one of the types of audits.

A company may conduct audits, or it may call a third party to conduct audits on their behalf. An example of a type of audit is an external audit. A company such as Microsoft would find an external audit very useful. Microsoft is a multinational company and therefore has offices throughout the world. It could hire an external auditor such as Deloitte to audit their financial records. The advantage of having an external auditor is that they are neutral and unbiased (Paino, Razali, & Jabar, 2015). There will be no conflict of interest arising while auditing since the external auditor works independently. These records are useful for investors and lenders.

References

Chen, S., Li, Z., & Chi, W. (2016). Client importance and audit quality: evidence from China*. Asia-Pacific Journal of Accounting & Economics, https://doi.org/10.1080/16081625.2016.1268061.

Paino, H., Razali, F. M., & Jabar, F. A. (2015). The Influence of External Auditor’s Working Style, Communication Barriers, and Enterprise Risk Management toward Reliance on Internal Auditor’s Work. Science Direct, https://doi.org/10.1016/S2212-5671(15)01094-1.