What is auditing and its types?

An audit is the review of a balance sheet which tells about gain and loss record prepared by someone else, as well as the accounts associated with it, by the auditor to inform himself and announce honestly that, in his opinion, such balance sheet is sufficiently drawn up to exhibit a true and valid view of the state of affairs of specific concern. The auditor must assess the effectiveness of internal control systems to determine the audit scope. Our experts will help students who are having trouble writing about auditing. For more details, see our auditing homework help page. Initially, its reach and implementation were restricted to cash audits. The auditor had to decide if the people in charge of account maintenance had adequately accounted for all cash transactions and payments made on behalf of this principle.

Audit Meaning: What Is Auditing?

Financial auditing is the process of checking a company's (or an individual's) financial statements for accuracy and compliance with all applicable practices, regulations, and rules.

Auditing Types

Internal audit

As the name implies, this method of audit is carried out by internal or external parties to assess the company's internal operations. It is a self-contained procedure that can or may not be communicated to management. Internal audit's primary goal is to assess if internal processes are functioning properly.

External Audit

An external audit occurs where an external form is used to conduct auditing. External companies may provide services such as tax, regulatory, consultancy, and sales audit. It is one of the most popular audit forms used in many businesses. Most businesses hire third-party agencies to perform external investigations in order to be objective and impartial.

Forensic Audit

This is a specialist audit carried out by a forensic accountant who is skilled in both inquiry and accounting. This is particularly useful in cases where the report's investigations can be used in court. Forensic auditing serves as evidence of the particular subject matter, so a specialized accountant must perform it.

Statutory Audit

Statutory audit refers to the auditing that is mandated by statute for local governments concerning specific financial statements for one particular class of entity. All banks' financial accounts must be audited by proper accounting companies that have been authorized by the Central Bank, as an example of regulatory auditing.

Tax Audit

A government's tax service or an appointed tax authority conducts tax audits. Tax auditing can be carried out as a result of a lawsuit filed by the government or a whistleblower. Since the company performs the tax auditing and the reports and results are sent directly to the government, the organization does not need to deal with the tax authority.

Information Technology Audit

This audit is carried out to ensure that security mechanisms and structures are reliable. Since the majority of transactions are now carried out using information technologies, this has become very necessary. Information technology auditing is critical for any financial institution, from ATM machines to Internet banking, where a vast volume of money is exchanged by computer. The majority of companies offer both IT and financial audits.

Environmental Audit

The key goal of doing an environmental audit is to assess the ecological resource feasibility and how a big enterprise manages it. An ecological assessment is usually performed by a Lord agency or a nonprofit organization for the public sector. It means that the organization's impact on the atmosphere does not exceed a certain threshold.

Compliance audit

A compliance audit is one of the categories of audits conducted to verify the workings of organizational processes and practices and their compliance with specified laws and regulations. The main goal is to confirm that internal rules are suitable compared to the government or regulatory body requirements in a specific organization.

Audit of Value for Money

When it comes to measuring efficacy, economy, and performance, a value for money audit is the best way to see whether the resources purchased are of good quality and are reasonably priced. A value for money audit aims to see if the materials that have been prepared are the best value for money and the best available material in terms of quality.

Conclusion

All of the forms of audits that a company employs as mentioned above. Audits assist an organization in both improving and adhering to a series of procedures. As a result, the corporation needs to conduct routine audits and act on the findings of those audits. Go to our page Homework help with auditing if you need assistance with an audit submission.