Why “Established Criteria” An Important Audit Feature?
Rules and laws are very important for defining boundaries and defining the limits of conducting certain tasks. When conducting audits, certain rules and laws are a must to follow, which are defined by the authorities of every state. It is the responsibility of everyone to abide by the rules and regulations for better and fair outcomes. When conducting audits and auditors must be able to compare the financial records of an organization or business they are auditing against the given rules. This term is known as the established criteria and is an important audit feature. The significance of this feature is because it helps in better decision-making for the authorities and the organizations being audited.
Keep reading this article to get a clear insight into this feature and know why this is an important element for auditors and businesses.
Top 6 benefits of established criteria for audits and auditors
Whether it is minor or major, every task requires certain guidelines and rules to help the person performing the task. With these available rules, one can never be wrong and the decisions made are always positive and effective. Similar is the case when auditors are conducting audits or businesses are looking for performing audits. One of the features of audits that act as a guideline is the established criteria.
Following are some of the reasons why established criteria are said to be an essential audit feature.
The auditor needs to have clear guidelines and rules to follow; because without them, they will be clueless. For this purpose, the established criteria help to a great extent as they tell them the standards against which they can conduct their audit activities. There is no way an auditor can make a biased decision while following the criteria. Following the given criteria and rule is important for better audit results, and only professionals are aware of the provided criteria. That is the reason why most businesses hire the top audit firms in Dubai for better audits.
Success of audits
When an auditor has defined rules and set of standards, it becomes easier for them to compare a businesses’ financial statements against those set of standards. With such accurate comparisons, the possibility of successful audits is always higher. That is why it is always suggested that the auditors must measure and compare the financial statements of the entity they are auditing against the standards. This means that if an auditor is making a successful audit, then the business receiving the audit reports is also making the best decisions.
Established criteria in audits are one of the major elements that control the audits. These controls are in terms of audit frauds and failure. The standards are equal for everyone, and it is obligatory for them to follow. If they fail to follow the given criteria, then they will face penalties and fines. Established criteria ensure that businesses and organizations conduct their audits on time and according to the given set of standards without hiding the facts. Audit controls are very important because most businesses try to hide their assets and income to pay less tax.
Everyone follows the same standard
No one can raise objections and questions regarding being audited or forced to conduct audits with the established criteria. With established standards, everyone will be forced and made to follow the same rules to conduct audits. For example, a business or organization with the same potential and income rates won’t question the audits if they are audited against the same standard. If you are hiring an auditor for your organization, then they will not come up with new rules; rather, they will audit you against the given standards regardless of who you are.
Identification of the personalities to audit
Established criteria are an important element and audit feature for the auditors because they are a source of clearing ambiguities. The auditor would be clueless if there were no standards because there are several people to audit. The established criteria help and guide the auditor about the personalities and entities they need to audit. Not everyone in the organization is to be held accountable. Only a few effective members of an organization need to be audited, and an auditor must know about this.
Reports are made accurate
An auditor is not a man of his own will neither various businesses and organizations are. They are bound by standards against which they have to carry out their financial tasks and compare their financial statements against the give standards. When you have such clear guidelines and rules to follow, there is no way you can conduct wrong audits. Wrong audits mean incorrect audit reports and higher penalties and fines. That is why you must follow the standards while conducting audits. You can also hire the top audit firms in Dubai to develop audit reports developed against these defined standards.
Do follow the given standards!
For avoiding penalties and getting better audit reports, it is important to follow the given standards. People will try to trick you by telling you the benefits of not following these rules but, you must not forget how important it is to abide by the law. A professional only knows the importance of these standards and has the ability to follow them.
Learn More: Amended VAT Penalties in the United Arab Emirates – A Brief Guide
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