Preventing fraud and error

Audit firms have an important role to play for businesses. In Pakistan it is required by the Securities and Exchange Commission of Pakistan that all the publicly traded companies must publish an audit report of the financial statements of the company. Without these external audit firms in Pakistan,this would not have been possible and the cost of audit for businesses would have a lot higher than it is now.

The job an audit report is to provide the stakeholders of the business with the opinion of auditor. These auditors are employed by the audit firmsin Pakistan who are chartered accountants go and visits the companies that need to audit. There many stages of an audit, but the overall goal of the audit is to assure the stakeholders of the business that the business is using the required standards of accounting, and the regulations are followed properly.

When business do not follow the accounting regulation while building the financial statements, there could be a lot of misrepresentation of facts from the business. An example of this is Enron, a large organization that is no longer existent, but the business recorded profits before they had actually occurred. The effect of this was the share price increased, investors were happy, from the looks of it everything seemed in profitable and in secure way. However, the truth was opposite. This was a serious scam, that had happened which also caused one of the biggest audit firms to close down. This scam caused many investors to lose money as the share price plummeted.

To ensure that there are not incidents like this happening in Pakistan, there is a strict governance policy that businesses have to comply with. To ensure that that the stakeholders interest are safe guarded. These audit reports are not only useful for publicly traded companies, but business that are not trading on the stock market can also use the audit reports.

Audit reports could help business identify that there are no frauds taking place internally. Many businesses are victim to unethical accounting from the accountants of the business and the managers are unaware of the fact. However, when the auditors take control they are able to identify any fraud or error. This is because of their expertise that they have acquired. Sayub& co. is an audit firm in Karachi for more information contact us today.