Financial audit is a type of accounting process involved in a business. It refers to an autonomous and independent assessment of a company’s financial statement and reports. The chief objective of financial audits is to provide a reasonable and legitimate assurance that the audited statements of finance are integrated and accurate. This financial statement is provided to the investors, managers and directors etc. by the particular auditor. The process of financial audit comprises the existence of auditor in order to evaluate the monetary and financial statements of a company in an appropriate manner.

Purpose of financial audit

1. The most significant purpose of financial audit is to present an authentic and accurate report of business transactions of a particular company or firm.
2. It makes sure to concede the justified accounts in front of the public.
3. A financial audit aims at providing useful results for the shareholders, banks etc. related to the company.
4. To enhance the confidence of engaged users in company’s financial statements is also among the prime purposes of a financial audit.

An accurate financial audit can only be done by a professional auditor. He or she can analyze each aspect and expression of a company’s financial matter. All the financial statements and reports are thoroughly analyzed by an auditor in all respects.

The prime need for organizing a financial audit of a company’s financial statements arises from the basis that the concerned person for the formation of financial reports and statements are usually diverse from the owners and holders of large corporations. On the other hand small-scale business holders have the latest and genuine knowledge regarding the affairs of their company and management. The separation of occupancy and ownership gives rise to the requirement of external audit.

Ambit of financial audit

Financial audit is designed or organized to cater a 'reasonable' affirmation regarding the precision of financial statements. The financial audits have become quite common nowadays as it provides numerous fruitful benefits to the company. Though there is no legal obligation to conduct a financial audit, it is important to conduct one. A financial audit has the capability of streaming the transparency in company’s financial affairs. It presents the true picture of an organization’s financial health. It helps in uncovering and rectifying many financial mistakes that cannot be rectified otherwise.

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