An audit is a systematic examination of financial records for the purpose of verifying their accuracy and detecting fraud or other irregularities.
Types of Audit
There are many different types of audits, and we will be discussing the most popular ones in this blog post.
Internal audits
Internal audit is also known as self-assessment which are conducted by employees within an organizations. It audits the system, processes and procedures of an organization against its own policies to ensure ethical practices are followed.
This type of audit usually occurs within an organization on a regular basis or whenever needed (e.g., before tax season). The purpose for this type of internal auditing is both to identify areas that need improvement and to determine if operations are being performed efficiently .
An example includes companies assessing their business continuity plans in anticipation of disasters which can have serious consequences should they occur without proper preparation.
As with other types, effective communication channels between employees must be established so all parties know who has authority over what functions/departments etc.. When dealing with multiple departments it's important not to
External audits
that are performed by independent auditors who have no connection to the company being examined.
Statutory Audit
A statutory audit is conducted after the completion of the final accounts. it is conducted by only chartered accountants. A Statutory auditor submits his report to the shareholder and the shareholder fixed his remuneration.
Detailed Audit
In this type of audit, only a few transactions are examined in detail. A detailed audit is also known as an audit in depth. It starts with General and ends with the Balance sheet.
Partial Audit
In Partial Audit, Auditor is not required to examine all books of accounts. If the owner finds any suspects in misappropriation of goods, he may be asked the auditor to check these.
Management audit
which is used to assess the performance and effectiveness of an organization's systems and processes.
Compliance audit
A compliance audit measures whether or not an organization has complied with laws, regulations, standards etc. These two types of audits are very different from each other as one focuses on how well you're doing your job while the other ensures that you're following rules imposed by outside agencies like government entities.
Information system audit is
another popular type of audit. This is used to assess an organization's IT infrastructure, systems and processes against standards set by regulatory bodies like HIPAA or PCI without requiring proof that they are being followed correctly.