Types of Audit
Based on purpose and specific organisational aspect several types of audits are conducted. Some of the most popular type of audits are:
1. Internal Audit: Internal Audit is examination of organisational books and statements by internal auditors, who are employee of that organisation. The aim is to maintain fair, timely and accuarte financial reports that helps in improving internal control and facilitates decision-making.
2. External Audit: External Audit refers to the auditing of accounts performed by external auditor who is independent of any type of employor-employee relationship in an organisation. External auditor gives more unbiased opinion in comparison to internal auditor. External Auditor’s report builds confidence inside various stakeholders regarding their investment decision.
3. Government Audit: Government audit is performed to check the accuracy of the statement showing total taxable income of the tax payer. It is done to ensure there is no misrepresentation of data that falls under a category of tax fraud. It aims to detect accuracy of tax return and tax paid by an organisation.
4. Financial Audit: Financial Audit is a process of examining the accounts and financial statement of an organisation that aims to determine the accuracy of the accounts. It determine how fairly the statements has been prepared in compliance to the relevant laws and accounting standards.
5. Operational Audit: Operational Audit examine the efficiency and effectiveness of internal operations, performance, and functioning of the organisation. The aim is to identify the area of improvements and to take effective measures of control to reduce the cost and manage risk factors.
6. Compliance Audit: Compliance Audit examines whether organisation fulfills all the legal requirements or not .i.e., whether organisation comply with all the relevant laws, rules and, policies and internal standards or not. Such audit helps to avoid penalties and any legal actions against the organisation.
7. Corporate Social Responsibility Audit: Corporate Social Responsibility Audit determine the impact of organisation’s activities on environment and society. The growing need of environment protection and sustainability, requires organisations to submit CSR report along with annual report, that shows impact of their economic activities on environment and society and initatives taken by them towards the protection and sustainability.
8. Forensic Audit: Forensic Audit is conducted to investigate and indentiy financial fraud and misconduct in presentation of data. The Auditor or Forensic Accountant uses specific forensic accounting techniques to determine financial misappropriation and looks for evidence to be presented at court.