What is an Independent Financial Audit, Do You Really Need It?

An independent financial audit is the examination of your business’s financial records, accounts, commercial transactions, accounting practices and internal controls by an “independent” auditor. The term independent basically refers to the fact that the auditor is not an employee of the business being audited, but rather is contracted for services through a contract and is therefore “independent”. During an independent audit, the auditor acts in accordance with generally accepted accounting principles. These can actually be listed as the Turkish Commercial Code, Tax Law, Turkish Accounting Standards and International Financial Accounting Standards. Although the last two articles do not have the force of law, it is important for the auditors to report them during an independent financial audit in order for the business to have a healthy financial management.

Why is Independent Financial Audit Requested? – What is Independent Audit, Why is it Important?

First of all, it should be emphasized that some independent financial audit procedures are mandatory by regulatory institutions and organizations (BRSA and CMB). When your business has a procedure that it must fulfill through these institutions, it will need to receive independent financial audit support. However, it would not be the right approach to be limited to this alone when answering the question of why independent financial audit is important. On the contrary, independent auditing has many advantages for a business:

• Independent audits show that the business is committed to the principles of financial transparency and accountability and increase trust.
• Since audited financial statements are based on the analysis of an impartial third party, they provide the board of directors with a better view of the financial condition of the organization.
• Some private foundations require potential grantees to submit audited and approved financial statements in order to be eligible for funding.
• Independent financial auditing can sometimes reveal fraud and irregularities in the financial management of your business.
• By receiving independent audit support, you can gain a healthier view of your financial condition and make healthier decisions for the future.
• Independent financial auditing can help you ensures that the rights of all partners are protected much better.

Who Needs Independent Auditing? – Why Is Independent Financial Auditing Important?

We stated above that it is mandatory for some institutions to receive independent financial auditing support from time to time. In this context, we believe that it would be useful to focus on who needs independent auditing services:

• With the new Turkish Commercial Code, all capital companies,
• Banks,
• Financial private institutions,
• Public institutions,
• And partnerships must receive independent audit support.

Not Mandatory for Standard Enterprises, but Beneficial!..

Independent financial auditing is not made mandatory by law for standard enterprises. However, it should be emphasized at this point that independent auditing has become a mandatory need, especially for enterprises that want to grow. A healthy and transparent financial management ensures the healthy growth of the company and the trust of all its stakeholders. In addition, as we emphasized above while answering the question of why independent auditing is important, independent auditing processes allow businesses to find financing more easily. In today’s high-cost and competitive business world, finding financing is undoubtedly extremely important for businesses. In this respect, more and more companies are ensuring the reliability of their financial structure with independent financial auditing support and are making their decisions for the future from now on.