Auditing has been defined as a "systematic process of objectively obtaining and evaluation evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communication the results to interested users". (Rittenberg and Schwieger, 2005) The Generally Accepted Auditing Standards (GAAS) have been developed by the Public Company Accounting Oversight Board (PCAOB), for public companies, and the American Institute of Certified Public Accountants (AICPA), for nonpublic companies to guide the practice of auditing within the public accounting profession in the United States. Companies need to be compliant to ensure that their gains and losses are computed correctly.
It seems almost evitable to cringe when it is time for your year end audit. Mainly because it feels like you are being judged on your work ethic. I always go into an audit as they are actually helping out the company to ensure that our accounting practices follow the rules and regulations of GAAP and are ethical.
I learned very quickly that when the audit team comes in to review your records, it is important to ensure your company has all their 'I's dotted and 't's crossed.
I work for a nonpublic company. This has its advantages and disadvantages. The main disadvantage is that we are not required to have close periods on month end. Our periods end up open for much longer than needed. Our last year end audit was not very organized. Our department had turnover in almost every position. We ended up doing more work at the end of the year than we would have done if the books were ready to be audited. This in return made the department further behind in day to day activities. We recognized the problem and are striving this year to have a smooth...