Audit services are considered to be an important aspect of corporate finance and governance by contributing towards transparency, accountability and compliance. However, the question surrounds us, is audit a financial service? The response would be yes, audit definitely comprises an essential ingredient of financial services and the impact is far-reaching to the businesses, investors as well as the regulatory authorities. However in this article we focus on this classification and look more closely at the financial aspect of audit, its pertinence and the key roles that it plays within the financial system.
Financial services refer to a great variety of professional services linked to the handling, investment, transfer, and depositing of money. This involves banking, insurance, assets management and most of all accounting and auditing. Audit is also included in this category since it measures and analyzes the financial statements and disclosures in an organization directly.
Auditors look at the way companies record, summarize and report about their financial information. The service is vital in assisting stakeholders, such as investors, creditors, and authorities in delivering representations about the financial position of a company that are right, reliable and fair.
The main aim of doing an audit is to give assurance that the financial statements of a company are not materially misinformed and this can be through fraud or error. It is done by performing a systematic audit of the financial records, transactions, internal controls and document supporting information.
Audits are beneficial in assisting:
Audit outcomes affect the credibility of financial reporting hence it is part and parcel of financial service delivery and corporate finance strategy.
Financial authorities and other professional bodies regulate audit services across the globe, thus making them further qualified as a financial service. In the majority of jurisdiction the audit firms are obligated to enroll with financial regulatory agencies and are expected to adhere to strict requirements that reveal:
This regime makes auditors work in an autonomous, professionally skeptical and technically competent manner which are all fundamental pillars of monetary administration.
It is the most usual type of audit, that is obligatory in case of some entities. It is an independent examination of annual financial reports with a view of complying with the laws and regulations of a specific area and financial reporting standards.
Internal audit is performed by or at the expense of the system to assess the work of internal control, the work of risk management and the financial declaration. They are a strategic financial role in large corporations although it is not always prescribed by law.
There are instances when financial discrepancies or frauds are anticipated; forensic audits are then carried out. It is a niche financial service frequently employed by litigation (or regulatory compliance).
Such an audit provides a wash in tax filings of a business with the financial records. It is important in the passing of checks to make sure that the tax liabilities are reported as received with the payment.
All these classes reveal how rooted the audit has gotten in the financial service arena.
Largest audit firms (often called the Big Four: Deloitte, PwC, EY, and KPMG) are not only the audit providers but also the giants of financial services. They offer the following services:
The fact that these companies are also dominant in the financial consulting sphere as well as in auditing proves the fact that the financial industry and audit services are interdependent.
We understand that many companies may need assistance navigating the audit process. For audit arrangements, we HL Khoo Group can do it for you through our trusted network of licensed audit professionals. We coordinate end-to-end audit engagements to ensure full compliance with statutory and financial standards.
Capital markets and investors use audited financial statements to base their decisions upon. Through an audit, the performance measures of a certain company such as:
Devoid of independent audits, the financial integrity of listed firms would have been jeopardized thus causing instability in the market hence investment risk would also be high.
Although audit has a financial character of service, it has a specific purpose as compared to banking or insurance. Auditing is not the same as the services which either help in money transfer or protection. Auditing is a control and check measure. It however, operates alongside other services in order to maintain soundness of financial operations.
For example:
Put simply, without the reliability of audit one cannot build any other kind of trust across the board in others of financial services.
There has been a great revolution in the field of audit during the digital age. Nowadays, auditing firms incorporate:
These advancements are bringing audit to step in line with the digital finance arena and it has shown that audit like any other financial service is tech-enabled and is future ready.
Yes. Audit is a core financial service because it involves the examination of financial records, ensuring they comply with accounting standards like IFRS or GAAP, and provide accurate financial information to stakeholders.
Businesses that are:
• Publicly listed companies
• Private limited companies exceeding certain thresholds (e.g. revenue or assets)
• Entities required by law or regulation
• Organizations seeking loans or investor funding
• Accounting is the process of recording, classifying, and summarizing financial transactions.
• Auditing is the independent review and verification of those financial records to ensure accuracy and compliance.
• Statutory audit
• Internal audit
• Forensic audit
• Tax audit
• Compliance audit
• IFRS (International Financial Reporting Standards) are global accounting rules used in over 140 countries.
• GAAP (Generally Accepted Accounting Principles) are the U.S. accounting standards. Audits are typically conducted to ensure financial statements comply with either IFRS or GAAP, depending on jurisdiction.
Most companies conduct annual audits, especially those legally required to do so or those preparing for investment, funding, or mergers.
It depends on the size and complexity of the business. On average:
• Small businesses: 1–2 weeks
• Medium to large companies: 3–8 weeks
Efficient record-keeping and internal controls can speed up the process.
• Financial statements (balance sheet, income statement, cash flow)
• General ledger and trial balance
• Bank statements
• Invoices and receipts
• Payroll records
• Tax filings
• Legal contracts or loan agreements
Auditors will report material misstatements or control weaknesses. Depending on severity, companies may need to:
• Adjust financial statements
• Improve internal controls
• Report issues to regulators
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