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What do Audit Firms do?

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  • Written By: Jim B.
  • Edited By: Melissa Wiley
  • Last Modified Date: 08 September 2016
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Audit firms are hired by companies to assess their financial information and determine if that information is complete and accurate. A firm may be an internal part of the organization of a company, or it may be hired as a contractor. In either case, audit firms must take great care to make sure that their auditing process is unbiased and not influenced by any preexisting relationship with the companies that employ them. When a firm is hired by a company, it must make sure the company adheres to all relevant laws and that its financial reporting is an accurate representation of the company's actual current financial standing.

Many companies operating around the world commonly perform transactions worth great sums of money on a daily basis. These companies are not only responsible to their stockholders, but also to the public at large, because their actions can affect the economy as a whole. Even smaller companies have a responsibility to provide absolute transparency in terms of their financial standing. For these reasons, audit firms are employed to present a clear financial picture of the companies that hire them.

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Of all of the responsibilities attached to audit firms, their ability to provide an unbiased assessment of the company that hires them may be the most important. A firm that lets its relationship with the company that hires it sway its judgment on that company is performing a great disservice to the people depending on the information. For that reason, many companies try to hire independent outside auditors to assure the public of their financial transparency.

Most audit firms employ financial experts who specialize in the legal side of finance. These experts are expected to ensure that all of a company's financial reports are in compliance with the applicable laws. In addition, these compliance experts use technical analysis to determine particular areas where a company may be in danger of non-compliance in the future, even if there are no current problems to report.

Another feature offered by most audit firms is an analysis of where a company may be at risk in terms of taxation. As larger companies are often taking in huge amounts of money, they often have a significant tax burden that they carry. Auditors can often perform accounting services that can help offset these taxes and suggest methods by which a company might be able to lessen its tax burden. Once again, it is crucial that anything suggested by auditors is compliant with tax laws, or else the company may suffer stiff penalties in the future.

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