To a publicly traded company, the financial statement audit offers credibility. To its shareholders, it offers comfort. And to all stakeholders — including the market at large — the external audit offers confidence.
The fundamental purpose of the audit is to provide independent assurance that management has, in its financial statements, presented a “true and fair” view of a company’s financial performance and position. It underpins the trust and obligation of stewardship between those who manage a company and those who own it or otherwise have a need for a clear and objective view. And that list of stakeholders is wide — from the audit committee, shareholders, employees and suppliers, to customers, banks, regulatory bodies and analysts.
A rigorous audit process will also, almost invariably, identify areas where management may improve their controls or processes, further adding value to the company by enhancing the quality of its business processes.
Given the critically important role the audit plays, PwC has prepared this useful overview of the financial statement audit — from appointment of the auditors, through the five phases of the audit process, to the final report and audit opinion.