The appropriate use and distribution of money within a business can make or break a company’s success, but failing to maintain accurate records of each transaction can do just as much damage. In order to establish transparency and accountability for company financials, audits are periodically conducted. In some cases, this financial oversight can keep an individual out of prison. The team at Financial Guaranty Insurance Brokers, Inc. recommends carrying a strong insurance policy that can help address the fees and penalties that could be assessed in an audit that reveals IT control failure.
Four Results of an Audit
An auditor will provide an independent opinion of the company’s finances, with the intent of helping you move forward with better economic decision-making. If a CPA performs the audit, there could be one of four results.
- Unqualified Approval. This report shows no internal control breakdowns and has given your company a clean bill of health.
- Qualified Approval. This report indicated the auditor found either a single deviation from GAAP regulations or a scope limitation.
- Disclaimer of Opinion. These findings are inclusive, in that the auditor does not provide an opinion based on the limitations of the assessments that were conduction.
- Adverse Finding. When an auditor issues this opinion, it is a red flag for the investors and SEC, as it means the financials are misstated, should not be trusted, and as a whole, do not meet GAAP rules.