Types Of Audit And Compliance Audits Essay

1508 WordsJan 10, 20167 Pages
1.7- Types of Audit A. Compliance audits Compliance audits are carried out in order to determine if a business entity has complied with s policies, plans, procedures, laws, regulations or contracts that affect the organization. In order to successfully complete a compliance audit, there must be established criteria against which the compliance can be measured. B. Financial audits Financial statement audit is conducted to determine whether the overall financial statements (the information being verified) are stated in accordance with specified criteria. Normally, the criteria are generally accepted accounting principles (GAAP) or (IFRS), although it is common to conduct audits of financial statements prepared using the cash basis or some other basis of accounting appropriate for the organization or country. In determining whether financial statements are fairly stated in accordance with GAAP, the auditor performs appropriate tests to determine whether the statements contain material errors or other misstatements. C. Performance and operational audits Performance auditing involves determining management’s objectives, followed by establishing whether the management controls which exist lead to effectiveness, efficiency and achieving operational goals. The term “operational audit” is normally used to cover a variety of audit types. An operational audit may cover the evaluation of some or all of: • Internal controls • Compliance with laws, regulations and company
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