Financial Audit Services
Wiley Financial provides full scale Financial Audit Services in San Diego, CA. Lindsay Wiley is a certified financial auditor who serves all of Southern California from our office based in Carlsbad.
Whether your business is large or small, ensuring that your books are in order is a must. Not only will it help you keep your business in order internally but it can save you a lot of stress if the IRS gets involved. Allow us to step in and keep this aspect of your business running smoothly.
Types of Financial Audits
There are three main types of audits: external audits, internal audits, and Internal Revenue Service (IRS) audits. Financial audits seek to identify if there are any material misstatements in the financial statements. There are 4 outcomes of a financial audit:
- Unqualified opinion-clean report
- Qualified opinion-qualified report
- Disclaimer of opinion-disclaimer report
- Adverse opinion-adverse audit report
An unqualified, or clean, auditor’s opinion provides financial statement users with confidence that the financials are both accurate and complete.
External Audits
External auditors follow a set of standards different from that of the company or organization hiring them to do the work. The biggest difference between an internal and external audit is the concept of independence of the external auditor. When audits are performed by third parties, the resulting auditor’s opinion expressed on items being audited (a company’s financials, internal controls, or a system) can be candid and honest without it affecting daily work relationships within the company. External audits, therefore, allow stakeholders to make better, more informed decisions related to the company being audited.
External audits are commonly performed by Certified Public Accounting (CPA) firms and result in an auditor’s opinion which is included in the audit report. They can also include a review of both financial statements and a company’s internal controls. Audits performed by outside parties can be extremely helpful in removing any bias in reviewing the state of a company’s financials.
Internal Audits
Internal auditors are employed by the company or organization for whom they are performing an audit, and the resulting audit report is given directly to management and the board of directors. Consultant auditors, while not employed internally, use the standards of the company they are auditing as opposed to a separate set of standards. These types of auditors are used when an organization doesn’t have the in-house resources to audit certain parts of their own operations. Internal audits can also serve as a managerial tool to make improvements to processes and internal controls.
The results of the internal audit are used to make managerial changes and improvements to internal controls. The purpose of an internal audit is to ensure compliance with laws and regulations and to help maintain accurate and timely financial reporting and data collection. It also provides a benefit to management by identifying flaws in internal control or financial reporting prior to its review by external auditors.
Internal Revenue Service (IRS) Audits
The Internal Revenue Service (IRS) also routinely performs audits to verify the accuracy of a taxpayer’s return and specific transactions. When the IRS audits a person or company, it usually carries a negative connotation and is seen as evidence of some type of wrongdoing by the taxpayer. However, being selected for an audit is not necessarily indicative of any wrongdoing.
IRS audit selection is usually made by random statistical formulas that analyze a taxpayer’s return and compare it to similar returns. A taxpayer may also be selected for an audit if they have any dealings with another person or company who was found to have tax errors on their audit.
There are three possible IRS audit outcomes available: no change to the tax return, a change that is accepted by the taxpayer, or a change that the taxpayer disagrees with. If the change is accepted, the taxpayer may owe additional taxes or penalties. Should the taxpayer disagree, there is a process to follow that may include mediation or an appeal 5.
If you have a need for a certified financial auditor to provide financial audit services in San Diego or have questions around financial audit services, Wiley Financial would be happy to help! Please reach us by email at [email protected], by phone at 760-994-8874 or contact us here. You can also book a free consultation here.