principles of auditing types of audit ppt
- 1. DR A.SANGEETHA ASSISTANT PROFESSOR SRI RAMAKRISHNA COLLEGE OF ARTS & SCIENCE TYPES OF AUDIT
- 2. TYPES OF AUDIT Internal Audit. ... External Audit. ... Financial Audit. ... Information Technology Audit. ... Statutory Audit. ... Performance Audit. ... Employee Benefit Plan Audits. ... Forensic Audit.
- 3. Internal Audit As the name suggests, it is an audit of internal affairs; the Audit is carried out to decide if the internal part of the organization as per the rules and regulations. The internal Audit can be done by anyone, even by the organization’s employees. In this type of Audit, the auditors check if the organization follows proper norms and rules and whether it complies with all the internal regulatory standards.
- 4. External Audit External Audit can be compulsory for some organizations as per some rules and requirements of shareholders. The external audit report shall also be shown to the entire shareholder in annual general and board of directors meetings. Some independent professional does external Audit with the qualification mentioned in the rule. External Audits can be done annually, half-yearly or quarterly. If some organizations feel something needs to be correctly visible to seniors, they can also conduct an external audit. The organization can also appoint a third party to conduct an audit.
- 5. Financial Audit Financial Audit is essential for the organization as the shareholder invests money in the business and needs to know if their money is being properly used. Money is the profit for the company and making a profit is one of the objectives of the business, and it is an income for the organization. Financial Audit is an audit of the books of accounts to know if the organization is expressing the actual books or hiding some facts from their investors.
- 6. Information Technology Audit An information Technology Audit (IT Audit) is carried out to assess the organization’s IT infrastructure and know its system. It is done to inform the stakeholders that the organization’s IT structure is up to date and can meet the goals and objectives.
- 7. Statutory Audit The organization conducts this Statutory Audit to see if the organization is in complying with all Government regulations. It is verified by the external auditor while doing the external Audit and also demonstrates some of the financial reports, which include the following: Statements of bank Number of clients Earning on investment The Audit improves the transparency and trust among all the public and stakeholders of the organization
- 8. Performance Audit Performance audits cover a variety of assessments. A firm may request a performance audit to evaluate any of the following objectives: Program effectiveness and results Internal controls Compliance with certain requirements Prospective analysis Operational Audits Operational audits review an organization’s activities with specific aims. An auditor will analyze the process, procedure, and system; and evaluate operational effectiveness, efficiency, and productivity.
- 9. Employee Benefit Plan Audits Compliance Audits An employee benefit plan audit analyzes and evaluates an employee benefit plan’s financial statements A compliance audit is conducted to determine if it complies with a Government’s standards, rules, and requirements. A Government sets the conditions and hires an auditor to evaluate the entity’s compliance.
- 10. Forensic Audit A forensic audit examines a company’s financial records to identify illegal finance activity. The auditor(a forensic accountant) will look for evidence that may be used in court or for conflict resolution among shareholders. An organization may need a forensic audit if individuals suspect fraud, theft, or inaccuracies (both positive and negative) in account balances.