A business leader with a wealth of experience in corporate finance, Rohit Chakravarthy is senior vice president of Amobee Inc., a digital marketing company based in Redwood City, California. Previously the company’s global controller, Rohit Chakravarthy revamped its accounting processes, reducing audit adjustments from 148 to zero in one year.
Audit adjustments are modifications proposed by external auditors on a company’s financial statements to correct misstatements. Misstatements occur when company accountants or finance teams record transactions contrary to applicable accounting standards such as the GAAP.
Before a company publishes its financial statements, it will have an external auditor review them and give an opinion in an audit report. Where the auditor finds material misstatements, he or she will raise them with the company’s management and recommend modifications. If management approves the modifications, the auditor will make them and give the company a clean audit report. Where management does not approve, the auditor may not give the company a clean report. Some managers reject adjustments when they can negatively impact their prospects of meeting bonus targets. However, in many cases, management approves adjustments.
In recommending adjustments, auditors only focus on correcting material misstatements that could impact the finances of people or organizations who later relied on those financial statements to make decisions. Immaterial misstatements that, either individually or in total, do not have a significant impact on the accuracy and correctness of financial statements are ignored.
Rohit Chakravarthy 