An external audit is an independent review of a company's or entity's accounting. Its purpose is to determine whether its accounts properly reflect its equity, financial position and results.
Beyond meeting an obligation, an external audit can provide useful information to identify errors, strengthen controls and build greater confidence in a company's financial information.
Is it mandatory to have an external auditor?
According to the analysis, every company must undergo an external audit every year from its incorporation.
The external auditor must be appointed after the company is incorporated and, for subsequent fiscal years, within the first five months of each year by the General Shareholders' Meeting.
For individuals, under Article 474 of the Commercial Code, they must appoint an external auditor when their business assets at fiscal year-end are equal to or greater than $34,000.00.
Why does an external audit matter?
An independent review doesn't just assess the financial statements. It can also provide relevant information for running the company.
Greater transparency and trust
The audit provides an independent assessment of financial information, which can build greater trust among shareholders, banks, suppliers and other users of that information.
Detection of errors and irregularities
Analyzing the accounting records makes it possible to identify potential errors, irregularities or situations that need attention.
Stronger internal control
The findings can help identify areas for improvement and opportunities to strengthen controls and reduce risks.
Better information for decision-making
Having reviewed financial information makes analysis easier and can contribute to better planning and decision-making.
Stronger standing with third parties
A company with regular external audits can rely on financial information that builds greater confidence with investors and lenders.
What does the external auditor deliver?
The audit process can produce different reports and communications for management and shareholders.
Management letter
A document addressed to management that communicates the findings identified during the review.
External auditor's report
This is the outcome of the audit work. In this report, the auditor gives an opinion on whether the financial statements fairly present the account balances.
This report is presented to the General Shareholders' Meeting.
Auditing that goes beyond compliance
An external audit shouldn't be seen only as a requirement to meet every year.
It can also become a tool to better understand the company's financial position, identify risks and strengthen internal processes.
The information that comes out of an audit can help management make decisions with greater clarity and support.
Does your company already have an external auditor?
Meeting this obligation on time and having a proper review keeps financial information in order and addresses applicable requirements.
At CENTR4L Audit we support you through the external audit process, from reviewing the information to delivering the corresponding reports.
Need to check whether your company is required to have one?
Let's talk about your company.
