What is the primary function of audits in managing risks?

The primary function of audits in managing risks is to identify discrepancies in financial operations. Audits are systematic evaluations of financial statements, processes, and compliance with regulations. Their main purpose is to ensure the accuracy and reliability of financial information, which in turn helps organizations detect errors, fraud, or mismanagement of funds. By identifying discrepancies, audits provide insights that can help organizations mitigate risks associated with financial reporting and enhance overall transparency and accountability.

While assessing organizational risks comprehensively is important, the approach of audits primarily focuses on financial operations, making the identification of discrepancies a fundamental aspect of effective risk management. Understanding and addressing these discrepancies can lead to improved operational efficiencies and more effective controls over financial processes. This, in turn, helps organizations to make informed decisions and safeguard their assets.