Audit represents a thorough examination of annual financial statements, consolidated reports, and other relevant financial documents, along with an analysis of the data and methods used in their preparation. Its primary goal is to ensure that financial statements are accurate, transparent, and compliant with applicable laws, regulations, and accounting standards.
There are two main types of audits: internal and external.
Internal audit is conducted within the organization by employees specialized in this function (internal auditors). Its task is to analyze business processes, financial reports, and internal controls, and to highlight potential weaknesses, inefficiencies and risks. Besides detecting irregularities, internal audit helps management improve business efficiency and ensure compliance with internal policies and procedures.
External audit, on the other hand, is performed by independent, external experts – certified auditors. The purpose of an external audit is to provide an objective opinion on the credibility and accuracy of financial statements. This allows investors, shareholders, financial institutions, and other stakeholders to gain insight into the company’s actual financial condition, thereby increasing their trust in the business.
The audit process is carried out through clearly defined phases that enable an objective and systematic evaluation of the business. The first phase involves selecting and defining criteria that describe the so-called “desired state,” or the standards that certain processes and reports should meet. Next follows an analysis and investigation of the actual state through the collection of evidence and audit data. In the third phase, the actual state is compared with the desired state to identify any differences. Based on the gathered information, a professional conclusion is drawn about the degree of compliance, and the audit opinion is formed. The final phase involves preparing a report aimed at the end users, containing findings, conclusions, and recommendations for improvement.
Audit holds exceptional value for business operations. Its role goes far beyond mere number checking – it is a tool for strengthening business stability and transparency. In times when market trust plays a crucial role, accurate and reliable financial reporting facilitates easier decision-making for investors, banks, partners, and other stakeholders. Regular audits help identify inefficient processes, unnecessary costs, and other operational weaknesses, creating a foundation for rationalizing and optimizing business activities. They also enable timely adaptation to legislative changes and regulatory requirements, reducing the risk of penalties and adverse consequences. Furthermore, audit significantly contributes to strategic planning – the analyses and insights it provides often serve management as a basis for making long-term and strategic decisions. Ultimately, audit is not just a legal obligation or bureaucratic formality – it is a powerful management tool that enables a company to build solid foundations, gain market trust, and ensure long-term sustainability and competitiveness. Investing in high-quality and regular audits is, in fact, an investment in the security, stability, and successful future of the business.
Admoneo grupa d.o.o. has long-term experience in the field of auditing and accounting. Therefore, if you want to ensure your company meets high standards of transparency and compliance, contact us to learn how our expert services can support your business: ured@knjigovodstveniservis.hr. Our accounting and auditing services guarantee the accuracy and security of your financial statements. ured@knjigovodstveniservis.hr
Sources:
Narodne novine. Zakon o reviziji. Download from https://www.zakon.hr/z/417/zakon-o-reviziji
Ministarstvo financija Republike Hrvatske. Unutarnja revizija i korporativno upravljanje [PDF dokument]. Downlaod from https://mfin.gov.hr/UserDocsImages/dokumenti/medun-suradnja/Unutarnja%20revizija-korporativno%20upravljanje.pdf