The verification of financial statements, also known as auditing. Legal obligation and benefits

Who requires financial audits?

A financial audit involves the verification of the financial statements of a company (or other institution or business entity) by an auditor. The aim of the audit is to verify that the financial statements have been made properly and meet the criteria set out in the Accounting Act. By law, audits are required to be performed by various types of financial and public institutions (e.g. banks, pension funds, insurance companies, joint-stock companies) and companies that meet at least two of the following conditions:

• employ at least 50 people on the basis of an employment contract;
• achieve a net income of at least EUR 5 000 000 or its equivalent in another currency;
• have a net asset value at the end of the financial year that exceeds the equivalent of 2 500 000 euros.

The Advantages of Financial Statement

The benefits of auditing financial statements

The auditing of financial statements provides so many benefits that it can be worthwhile even if the entity has no legal obligation to do so. An audit can tell you for certain that a company's financial situation is actually as it is described in the accounting documents. In the case of any irregularities identified during the audit process, corrective actions can be taken before any errors manage to cause serious consequences. These could be very costly in the case of an inspection being conducted by the Tax Office.

In many situations, the audit of financial statements reveals irregularities that are difficult to identify by other methods. By enabling the detection of errors in the accounting books, an audit allows you to see if the financial strategy of the company is being carried out according to plan. If it is not, it can indicate the weak points and areas that require action. As a result, planning and budgeting becomes easier and more accurate. The auditor also evaluates the effectiveness of internal control systems and suggests changes to eliminate any weaknesses.

To ensure that the financial affairs of a company are in order, use audits and treat them as a sound investment, not a superfluous expense.

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