Financial Auditing in New South Wales Simply Explained

Financial Auditing in New South Wales Explained

Financial reporting is maintained by NFPs and charity organisations to provide information about their financial performance to managers, benefactors, employees, banks, regulatory bodies and other interested parties.

A financial audit is an objective assessment of this financial reporting, including income statements, balance sheets and cash flow statements. Auditing these documents ensures records are accurately maintained and provide a fair representation of the organisation. With specialisation in not -for-profit and for-purpose companies, Brown Auditing Services conducts financial audits for clients across New South Wales, helping them to improve accounting processes.

What is a Financial Audit?

A financial audit provides an impartial evaluation and examination of your financial records to make sure they are fairly presented and compliant with the Australian Accounting Standards. They are typically conducted on an annual basis by someone within the company or from an independent, certified financial auditor. The latter is usually preferred as external auditing tends to produce more objective and accurate audit reports.

The process can involve carefully examining financial reporting documents, implementing audit working papers, preparing future planning documents, risk documentation and conducting internal reviews. The aim of audit reporting is, ultimately, to check whether financial records accurately and transparently reflect the financial performance of the organisation. Whether or not the records are sufficiently transparent, an audit report will outline how financial reporting processes can be improved.

Why is a Financial Audit Required?

Audits assist businesses with financial decision-making, as well as helping them to meet regulatory requirements. Private companies and charities that generate over a certain dollar figure in revenue, publicly listed companies, registered schemes and disclosing entities must all be audited on an annual basis.

Organisations may also be required by a lender or government body to undertake an audit if they are applying for a grant or a loan. A financial audit may also be recommended if you are selling your business, in order to assure potential buyers that financial statements are accurate.

Benefits of a Financial Audit

Financial audits have an intimidating reputation but are in reality incredibly valuable for an organisation as an audit often leads to better decision-making and provides valuable insights for the future. It assures any stakeholders that management has provided a fair and accurate view of the organisation’s financial position and that accounting documents are free of fraud and financial mismanagement.

Many smaller private companies, charities, sporting clubs, not-for profits and other entities voluntarily engage a financial auditor to inspect their books each year. Audit reporting can help organisations manage complex compliance requirements for organisations subject to the Australian Accounting Standards and international standards such as the IFRS and GAAP.

If your organisation is bidding for a public or private tender, a financial audit can make your bid more competitive due to increased confidence in your finances. An audit may also detect signs of fraud for business owners who are not actively involved in the daily running of the business.