Company audit

How is success measured?  In sports, its about the Super Bowl, World Series and Stanley Cup.  In business, itís about a successful audit. 

The complete guide to Sarbanes-Oxley : understanding how Sarbanes-Oxley affects your business
Stephen M. Bainbridge.
Avon, Mass. : Adams Media ; Newton Abbot : David & Charles [distributor], 2007.
Includes index.
Infectious greed : how deceit and risk corrupted the financial markets
Frank Partnoy.
New York : Times Books, 2003.
The bestselling author of "F.I.A.S.C.O." presents a riveting chronicle of the rise of dangerous financial instruments and the growing crisis in American business. Partnoy recounts the rise of the trading instruments and corporate financial structures that now imperil the economic health of the country. Author speaking tour.
The number : how the drive for quarterly earnings corrupted Wall Street and corporate America
Alex Berenson.
New York : Random House, c2003.
In this commanding big-picture analysis of what went wrong in corporate America, Alex Berenson, a top financial investigative reporter for The New York Times, examines the common thread connecting Enron, Worldcom, Halliburton, Computer Associates, Tyco, and other recent corporate scandals: the cult of the number. Every three months, 14,000 publicly traded companies report sales and profits to their shareholders. Nothing is more important in these quarterly announcements than earnings per share, the lodestar that investors #8212;and these days, that #8217;s most of us #8212;use to judge the health of corporate America. earnings per share is the number for which all other numbers are sacrificed. It is the distilled truth of a company #8217;s health. Too bad it #8217;s often a lie. The Number provides a comprehensive overview of how Wall Street and corporate America lost their way during the great bull market that began in 1982. With fresh insight, wit, and a broad historical perspective, Berenson puts the accounting fraud of the past three years in context, describing how decades of lax standards and shady practices contributed to our current economic troubles. As the bull market turned into a bubble, Wall Street became utterly focused on #8220;the number, #8221; companies #8217; quarterly earnings. Along the way, the market lost track of what companies are really supposed to do #8212;build profitable businesses with sustainable futures. With their pay soaring, and increasingly tied to their companies #8217; shares, executives were more than happy to give Wall Street the predictable earnings reports it wanted, what-ever the reality of their businesses. Accountants, analysts, money managers, and individual investors played along, while the Securities and Exchange Commission found itself overwhelmed and underequipped to cope with the earnings game. The Number offers a unified vision of how today #8217;s accounting scandals reflect a broader system failure. As long as investors remain too focused on the number, companies will find ways to manipulate it. Alex Berenson gives anyone who has ever invested in #8212;or worked for #8212;a public company the tools necessary to see beyond the cult of the number, understand accounting and its limits, and recognize patterns that can lead to fraud. After two decades of stock market hype, The Number offers a welcome dose of truth about the way Wall Street and corporate America really work.

Company audits, both internal and external, review the accuracy and completeness of the organizationís financial statements. The audit provides reassurance of the businessí integrity and soundness for public companiesí stockholders and non-profitsí donors.

Companies hire independent firms to handle their external audit.  This assures an independent review of the accounting system and a rigorous assessment of all financial operations.  Generally the audit firm will require the companyís financial statements including balance sheet, income statement, ledger and accounts, budgets, physical inventories, insurance policies, expenditures and receipts, tax documents, contracts, and schedule of fixed assets and depreciation. The audit firm will review internal controls the company has in place to limit misuse of company funds.  Company management should expect to be interviewed as part of the audit process. 

Cooperation is the key.  Through it opportunities for improvement are identified.
Provide a workspace in proximity to the records and documents that will be examined.
Identify a staff person, that has access to files, to be a liaison betweeen your company and the auditors.

Prepare for a successful audit

When the audit firm completes work a document, accompanied by letter where the auditors express their opinion of the companyís financial position and how well the company is complying with accepted accounting principles, is provided to the company.  Company officials respond with managementís plan for correcting or improving the situation. This response is included in the final audit report distributed to senior management, the external auditors, and shareholders or donors.

A good report is the goal of any company Ė A goal only reached after a major investment of planning, time, money and energy. 

Article by: St. Louis Public Library staff