In Nigeria the audit reports are standardized and they are governed by the rules and regulations that have been defined by the FRC or the Financial Reporting Council of Nigeria. This institution was established in the year 2011 and since then it has made sure that all the financial documentation of companies working in Nigeria is standardized which also includes the audit reports. Federal Ministry of Trade and development is the body under whose command and control this institution works to make sure that the companies abide by the rules and regulations of the government while compiling their financial documents. There are certain objectives of the FRC according to which not only it works but also makes sure that these objectives are fulfilled all the times especially when it comes to the companies audit reports. Some of them are listed below:
- While compiling the audit reports the interests of the investors as well as stakeholders should be protected.
- Companies requiring financial assistance are not only guided but it is also made sure that the best interest of the business is protected all the time.
- FRC ensures that the audit reports published make sure that the good corporate governance is being preserved all the times when it comes to public as well as private sectors.
- The accuracy of the financial reporting is also ensured by the FRC and it also includes the internal as well as external audit reports.
- The financial reporting done by the company is credible and audit reports being the most important part is also emphasized.
- The quality of audit as well as the related audit reports must also be increased in this regard.
Since inception FRC has made sure that the best practices related to financial reporting are preserved. The resident as well as the nonresident companies makes sure that they always consult FRC before any type of decision related to financial reporting is undertaken or implemented. The expert advice of FRC I like a boon to the companies which makes sure that the best interest of financial reporting is not only maintained with audit reports but the interest of the company is also preserved. According to the scope of the work there are several advantages of FRC out of which some are listed below:
- FRC ensures that the accounting practices of public as well as private sector is in line with the principles defined and therefore it reduces the volatility of the audit reports and the related errors.
- It is the professionalism of the FRC that always reduces the risk of financial market crises and therefore negative economic growth is also reduced to a great extend.
- Easy access of credit is made possible by FRC and it is done by making sure that the audit reports and the related accounting practices are made safe, secure and transparent.
- Last but not the least the FRC also makes sure that new job opportunities are created within the economy.
Audit reports have a huge impact on the financial future of the business as they provide a clear view to the management and the stake holders about the short comings within the financial structure of the business. The Audit reports also ensure that the company’s financial forecast is also highlighted so that the stakeholders make their minds clear to continue their business with the company. The importance of the Audit reports can be judged by the fact that the coming year’s financial and investment management solely depends upon this financial document and very important decisions are taken by the management to boost the confidence of the investors and stakeholders. The Audit reports should be written in a detailed and professional manner so that the related people can get a clear idea of what the future of the business would be. The Audit reports are legal documentation of the financial health of the company and if it has been formulated by the internal auditor then the external auditors make sure that the validity of the internal auditor’s credibility is also measured based upon this piece of evidence. Unfortunately the business owners in this world of advance trade and rapid growth are not free to take a close look at the audit while it is being performed at the year end and they leave it to the financial department which not only hampers their business but also leads them towards failure. It is therefore advised to make sure that the owners should take personal interest in making of the audit report and should suspend all other activities even business related. The best Audit reports should make sure that following sections are included to make audit report as one of the best year end documents.
- Corrective actions
It is very important to note that the corrective actions are mentioned within the audit report so that the business could get the direction and can perform according to the needs and demands of the Audit reports. A quality audit report is the one that containsall such factors in light of evidence and the auditors have made sure that the corrective actions are also embedded with their own view point so that their prowess is also shown in this regard. The report should be written keeping in view the objective of audit and the related outcome as these are the only points which make it the best financial document.
- Identification of the issues
The report should mention the issues that have been identified to make sure that the corrective related departments are made aware of the shortcomings within the financial structure of the business. Again the issues that have been identified in this regard must be supported by evidence and should be presented in a well defined format so that the company can follow them with ease and satisfaction.
www.InnerKonsult.com Nigeria Accounting, Tax,
Audit & Investigation service.
Whatsapp: +234 803 8460 036
