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Chief Editor of - Book USA Airlines
United Airlines is one of the largest airlines in the world, with operations spanning across the globe. As a publicly-traded company, United Airlines is required to undergo regular audits to ensure compliance with financial regulations and to maintain transparency with its shareholders. So who exactly audits United Airlines, and what does the auditing process involve?
The auditing of United Airlines is a complex process that involves multiple parties, including the airline’s internal auditors, external auditors, and regulatory bodies. In this article, we will take a closer look at the auditing process for United Airlines and the various entities involved in ensuring the airline’s financial integrity.
Who Audits United Airlines?
United Airlines is one of the largest airlines in the world, serving approximately 148 million customers annually. As a publicly-traded company, United is required to undergo regular audits to ensure compliance with financial regulations and to maintain transparency with its investors. In this article, we will explore who audits United Airlines and the importance of these audits.
Internal Auditors
Like most large companies, United Airlines has an internal audit department that is responsible for evaluating the effectiveness of the company’s internal controls, risk management processes, and compliance with laws and regulations. United’s internal auditors work independently from other departments and report directly to the Audit Committee of the Board of Directors.
Internal auditors at United Airlines are responsible for conducting audits on various aspects of the company, including financial reporting, operations, and information technology systems. Through their audits, internal auditors provide valuable insights into areas where the company can improve its processes and identify potential risks.
External Auditors
In addition to internal auditors, United Airlines also engages external auditors to provide an independent assessment of its financial statements. The external auditing firm is responsible for expressing an opinion on the fairness of United’s financial statements and ensuring that they are presented in accordance with Generally Accepted Accounting Principles (GAAP).
The external auditor for United Airlines is currently Ernst & Young LLP, a global professional services firm. Ernst & Young has been United’s auditor since 2013 and is responsible for conducting an annual audit of the company’s financial statements. In addition to the annual audit, Ernst & Young also performs reviews of United’s quarterly financial statements.
Benefits of Auditing
The audits conducted by both internal and external auditors provide numerous benefits to United Airlines. Internal auditors help the company identify areas where it can improve its processes and controls, which can lead to increased efficiency and reduced risk. External audits provide assurance to investors and other stakeholders that United’s financial statements are reliable and accurate.
Audits also help United Airlines ensure compliance with laws and regulations, such as the Sarbanes-Oxley Act, which requires companies to establish and maintain internal controls over financial reporting. By complying with these regulations, United can avoid potential financial penalties and damage to its reputation.
Internal vs. External Audits
Both internal and external audits play a crucial role in ensuring the integrity of United Airlines’ financial reporting. Internal audits focus on evaluating the company’s internal controls and identifying areas for improvement, while external audits provide an independent assessment of the company’s financial statements.
Internal auditors are employees of the company and have a deep understanding of its operations and processes. They are therefore well-positioned to identify potential risks and recommend changes to improve efficiency. External auditors, on the other hand, are independent from the company and provide an objective assessment of its financial statements.
Audit Committee
The Audit Committee of the Board of Directors is responsible for overseeing the company’s internal and external auditors. The committee is composed of independent directors who have expertise in finance and accounting.
The Audit Committee reviews and approves the company’s financial statements and ensures that they are presented in accordance with GAAP. The committee also oversees the internal auditors and reviews their findings and recommendations.
Reporting Audit Findings
After completing an audit, both internal and external auditors are required to report their findings to the Audit Committee. The committee then reviews the findings and makes recommendations for changes or improvements to the company’s processes and controls.
If the auditors identify any material weaknesses in the company’s internal controls, they are required to report them to the Audit Committee. Material weaknesses are significant deficiencies in the design or operation of internal controls that could result in a material misstatement of the company’s financial statements.
Auditing Standards
Both internal and external auditors are required to adhere to auditing standards established by the Public Company Accounting Oversight Board (PCAOB). These standards ensure that auditors maintain independence, exercise due professional care, and obtain sufficient evidence to support their opinions.
The PCAOB also requires auditors to communicate certain matters to the Audit Committee, including any significant deficiencies or material weaknesses in the company’s internal controls.
Audit Fees
United Airlines pays fees to both internal and external auditors for their services. The fees paid to external auditors are disclosed in the company’s annual proxy statement and are subject to review and approval by the Audit Committee.
The fees paid to internal auditors are not disclosed publicly, but are typically included in the company’s operating expenses.
Audit Frequency
United Airlines is required to undergo an annual audit of its financial statements by an external auditor. In addition, the company’s internal auditors conduct ongoing audits throughout the year to ensure compliance with laws and regulations and to identify areas for improvement.
Conclusion
In conclusion, United Airlines is audited by both internal and external auditors to ensure compliance with financial regulations and maintain transparency with its investors. Internal auditors evaluate the effectiveness of the company’s internal controls, while external auditors provide an independent assessment of its financial statements. Both types of audits provide valuable insights and recommendations for improving the company’s processes and controls.
Contents
- Frequently Asked Questions
- What is the role of an auditor?
- Why is auditing important for businesses?
- How often are companies audited?
- Who are some of the top auditing firms?
- How can I become an auditor?
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Frequently Asked Questions
What is the role of an auditor?
An auditor is responsible for examining the financial records of an organization to ensure accuracy and compliance with accounting standards. They review financial statements, transactions, and internal controls to identify any errors or potential fraud.
In addition to financial audits, auditors may also perform operational audits to evaluate the efficiency and effectiveness of an organization’s processes and procedures.
Why is auditing important for businesses?
Auditing is important for businesses to maintain transparency and accountability. It helps to identify any financial irregularities or errors, and ensures compliance with accounting standards and regulations. This can help to prevent fraud and improve the overall financial performance of the organization.
In addition, auditing can provide valuable insights into the efficiency and effectiveness of a business’s operations, helping to identify areas for improvement and cost savings.
How often are companies audited?
The frequency of audits varies depending on the size and complexity of the organization, as well as any regulatory requirements. Publicly traded companies are typically required to have an annual audit by an independent auditor, while smaller businesses may only be audited every few years.
In addition to external audits, many companies also perform internal audits on a regular basis to ensure compliance with company policies and procedures.
Who are some of the top auditing firms?
Some of the top auditing firms in the world include Deloitte, PwC, EY, and KPMG. These firms provide a range of auditing, accounting, and consulting services to businesses of all sizes and industries.
In addition to these global firms, there are also many regional and local auditing firms that provide specialized services to businesses in specific geographic areas or industries.
How can I become an auditor?
To become an auditor, you typically need a bachelor’s degree in accounting or a related field, as well as professional certification such as a Certified Public Accountant (CPA) or Certified Internal Auditor (CIA).
Many auditors also have previous experience working in accounting or finance roles, and may have additional certifications or specialized training in areas such as fraud detection or risk management. Continuing education is also important to stay up-to-date on changes in accounting standards and regulations.
United Airlines stock rises on BNP Paribas upgrade
In conclusion, United Airlines is audited by a number of different entities to ensure that the company is operating in compliance with all relevant laws and regulations. These audits are conducted by both internal and external auditors, and cover a wide range of areas including financial reporting, safety and security, and environmental compliance.
One of the key reasons why United Airlines is audited so frequently is that the airline industry is highly regulated, with numerous government agencies and industry bodies responsible for overseeing different aspects of airline operations. This means that United Airlines must be vigilant in ensuring that it is complying with all relevant regulations, and that its internal controls and reporting processes are robust and effective.
Overall, the auditing process is an important part of United Airlines’ ongoing commitment to transparency and accountability. By working closely with auditors and regulators to identify areas of improvement and implement best practices, the airline is able to maintain the highest standards of safety, reliability, and customer service for its passengers and stakeholders.
