What is a (financial) audit?

You probably heard the word audit once in your life. It’s a word not a lot of people use daily and so a lot of people might not know the meaning of this word. So, what is an audit?

An audit is a control investigation to determine the status of certain aspects of a business over the past period. The results are shown in a report. Because there are a lot of different parts within an organization, there are multiple types of audits. In this article, I will tell you more about the financial audits.

Financial audits

A financial audit examines the financial status of the business. The results will determine if your company is financially healthy. It tells you everything about the financial position over the past period and so you know if your company is doing all right.

In a financial audit, there are multiple aspects that are reported. Within the reports, you will find a balance sheet, the changes in equity, the cashflow. You will also find good and clear explanations on the changes.

Who does those audits?

You can make a financial audit by yourself. But you need to be good with numbers and know what you are doing to do it right. For a lot of companies, it’s better to hire an audit firm to do the work for you. They have a lot of experience doing it and they can give you external advice how to save money in the upcoming period.

Is it necessary to make a financial audit?

First of all, a financial audit shows a clear overview on your financial status. You know if your company is healthy. Second, you can easily see aspects to improve on, so you will improve your business. And finally, some companies are required to bring out a financial audit each year. When you have 50+ employees, a net turnover of more than 12 million euros and a value of assets of 6 million or above, you are required to bring out a financial audit each year.