Section\n717 of the Companies Act 2015 states that an auditor in a private company must\nbe appointed for each financial year unless the company\u2019s directors resolve\notherwise that an audited financial statement will be required. According to\nthe Act, failure to appoint a company auditor must be reported to the Cabinet\nSecretary within 7 days. Failure to give this notice is a criminal offence.\nCompany audits are an integral part of a company\u2019s management process. Audits\nprovide credibility to a set of financial statements and they give both the\nshareholders as well as the government confidence that the accounts are\nlegitimate and fair. Audits also help to improve a company\u2019s internal systems\nand controls. In this article we\u2019ll look at some of the duties of company\nauditors and why company audits are so important. <\/p>\n\n\n\n
Company\nauditors must give a true view of the company’s state of affairs and profit or\nloss of the company for that financial year. In their reports auditors must\ndisclose whether the annual financial statements have been prepared using the\nrelevant frameworks. They must also give a report of whether the company\u2019s\nfinancial reports have been prepared in accordance with the requirements of the\nCompanies Act 2015. <\/p>\n\n\n\n
When\nmaking their reports, company auditors must ensure that their reports contain\nstatements of whether they obtained all the information necessary for the\naudit. They must also keep true and proper books of a company\u2019s accounts. This\nmeans that they must ensure that the balance sheets as well as the profit and\nloss accounts are in accordance with the books of accounts and that they are\ntrue and accurate representation of a company\u2019s state of affairs. <\/p>\n\n\n\n
There\nare numerous reasons why company auditors play a major role in ensuring that a\ncompany\u2019s internal systems are legal and in compliance with the set laws.\nCompany auditors are important for the following reasons: <\/p>\n\n\n\n
Recurring\nannual analysis of a company\u2019s financial operations as well as maintaining\nstrict internal control systems play a major role in the detection of fraud and\nirregularities. Auditors help companies with the modification of their internal\ncontrol systems which keep companies in check in order to avoid a world of\nlegal trouble. In addition, companies that are known to have diligent and\nrigorous audit systems deter potential acts of company fraud by employees or\npartners.<\/p>\n\n\n\n
Companies\nwith effective audit systems are able to pursue and obtain their various\ncorporate objectives. When a company\u2019s internal processes are under constant\nsurveillance and monitoring, it is easy to maintain adequate records. These\nwell-kept records promote operational productivity and helps companies to\nimprove their function in the areas that may not be doing well. <\/p>\n\n\n\n
Auditors\nare tasked with calculating the possible risks of the mismanagement and\nmisstatement of a company\u2019s financial records. Lack of a proper system of\ninternal controls such as an audit system can prevent interfere with a\ncompany\u2019s financial reports. This would make it difficult for a company to\nadequately allocate resources to its various departments making it difficult to\naccurately determine how well the company is doing. Lack of proper auditing\nleaves the company vulnerable to legal and financial problems which would\notherwise be prevented by having proper control systems. <\/p>\n","protected":false},"excerpt":{"rendered":"
Section 717 of the Companies Act 2015 states that an auditor in a private company must be appointed for each financial year unless the company\u2019s directors resolve otherwise that an audited financial statement will be required. According to the Act, failure to appoint a company auditor must be reported to the Cabinet Secretary within 7 days. Failure to give this notice is a criminal offence. Company audits are an integral part of a company\u2019s management process. Audits provide credibility to a set of financial statements and they give both the shareholders as well as the government confidence that the accounts\u2026<\/p>\n","protected":false},"author":3,"featured_media":5463,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[103,74],"tags":[],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":5}},"_links":{"self":[{"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/posts\/5462"}],"collection":[{"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/comments?post=5462"}],"version-history":[{"count":1,"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/posts\/5462\/revisions"}],"predecessor-version":[{"id":5464,"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/posts\/5462\/revisions\/5464"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/media\/5463"}],"wp:attachment":[{"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/media?parent=5462"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/categories?post=5462"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tmc.ke\/staging\/wp-json\/wp\/v2\/tags?post=5462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}