AUDITING
Auditing performed by independent third party, like certified public accountant, Making information reliable among stakeholders. Audit may be performed like non-financial information, environment and compliance audit.
What is Auditing-
Auditing is the process of independently examining and verifying accuracy and complication of financial records and statement. Main purpose of Audit is Making information reliable among stakeholders. and compliance with law and regulations.
During audit, a auditor will testing and review the organization of financial record, transactions, balance, and internal controls to ensure the accuracy is accurate and complete. The auditor is also be assess the organization complete with relevant law and regulations. Audits can be performed on financial statements, such as balance sheets, income statements, and cash flow statements, as well as non-financial information, such as environmental or compliance audits.
Auditing is typically performed by independent third party, such as a CPA (certified public accountant), to ensure details equally. The result of auditing show be typically auditor report, such as including financial statement and other recommendations for improvement.
Auditing may be performed on financial statement, as balance sheet, income statement and cash flow statements, non-financial information, such as environmental and compliance audit.
Objective of Auditing-
The main purpose of auditing provide as assurance to stakeholder for the financial statement of organization is free from material of misstatement, whether caused by error or fraud. This assurance provided through an examination of the organization financial record, statement, internal controls and other evidence.
The objective of audit is making an opinion on the financial statement. This opinion is expressed in the auditor’s report and it’s based on the auditor’s examination of the financial examination.
Additional auditing purpose is identifying, reporting, illegal and unethical activity, assessing the effectiveness of internal controls, and making recommendation for improvement.
it is important to note that Auditing is not designed to detect all errors, frauds, or illegal acts that may occur, but rather to provide a reasonable level of assurance that the financial statements are free of material misstatements.
Types of Auditing-
There are several different types of auditing, each its own specific objectives and scope. Some of the most common types of auditing include:
- Financial Auditing: This is the most common type of auditing and focuses on the examination of an organization’s financial statements, such as balance sheets, income statements, and cash flow statements. Main purpose is provided assurance that the financial statements are accurate and in compliance with accounting standards.
- Compliance Auditing: This type of audit Goal on assessing an organization’s compliance with laws and regulations. such as including compliance with tax laws, labour laws, and regulations related to the environment, health, and safety.
- Operational Auditing: This type of audit purpose is examine an organization’s operations and systems to identify areas of inefficiency and make recommendations for improvement. as include assessing internal controls, evaluating the effectiveness of business processes, and identifying opportunities for cost savings.
- Information Systems Auditing: This type of audit focuses on the systems and processes used to capture, process, store, and transmit data. The objective is to ensure the security, integrity, availability and the reliability of the information.
- Forensic Auditing: This type of audit is purpose is used to investigate fraud, errors, embezzlement, or other financial irregularities. It typically involves a detailed examination of financial records, transactions, balance sheets, and other evidence to identify and prevent fraud.
- Internal Auditing: This type of audit is performed by employees or workers of an organization, its opposite of external audit. The goal of internal auditing is to provide assurance to the management regarding the organization’s internal control and governance.
- Environmental Auditing: This type of audit examines on organization’s compliance with the environmental regulations and assesses the organization’s impact on the environment.
- Performance Auditing: This type of audit examines the efficiency and effectiveness of an organization’s operations, programs, and services to determine whether it is achieving its goals and objectives.
It’s important to note that an organization may required multiple types of auditing depending on the specific needs and requirements of the stakeholders.
Non-profit Audit-
This type of financial audit that performed on non-profit organization, such charity, foundations, and other that do not operate for the purpose of making profit. The main purpose of non-profit audit is provide us assurance to stakeholders, such as donors, regulators, and peoples, that organization’s financial statement are accurate and compliance with laws and regulations.
During non-profit audit, the auditor will examine, review and test the organization’s financial records, transactions, balance sheet and internal controls to ensure that they are accurate and complete. The auditor will also assess the organization’s an compliance with relevant law and regulations, such as reporting requirements of the IRS for tax exempt of organizations.
The audit process for non-profit organizations may include some specific procedures that are not required for for-profit organizations, such as testing of donations and grants to ensure compliance with donor’s restrictions and the compliance with laws and regulations that govern the reporting and use of funds.
The results of a non-profit audit are typically reported in an auditor’s report, which are includes an opinion on the financial statements and any recommendations for improvement organizations. The report is intended to help the non-profit organization in its accountability to its stakeholders and to demonstrate good governance.
Basic Principles of Audit-
- Independence
- Professional skepticism
- Materiality
- Evidence
- Audit Risk
- Professional Standards
- Documentation
- Communication
These principles are the foundation of an audit, and auditors will add to ensure that their work is conducted in a thorough, objective, and professional manners.