Get to know what auditing is. And what are the different types of auditing?
Another very important thing in accounting is “Audit of accounts” because it is considered the key to helping detect financial errors. Shows the company’s growth rate and create stability for the organization This article will take you to learn more about account auditing. Solving your doubts about what accounting auditing is, how many types are there, and how are each type different?
What is an audit?
Auditing is a systematic review and examination of accounts in various organizations. To see if the financial guidelines are up to standard or according to plan or not. This is in order to know the financial status of the organization. See every aspect of that company’s finances, whether it be financial statements, cash flow statements. Working capital rate Current liabilities Management accounting or the ability to repay debts, etc., so that the business can move forward
The results of the audit will be reported to shareholders or those who have a stake in the business. to be used for further decision making And sometimes it is also distributed to external stakeholders such as the government, banks, creditors or the public.
What types of auditing are there? How are they different?
Auditing is divided into several types according to its purpose. Inspection process and level of confidence The types of account verification are as follows.
Financial Statement Audit
Financial statement auditing is the examination of financial accounts and reports by an auditor. To be used to evaluate or check whether the information is complete and accurate according to the established rules or not, it can be a comprehensive income statement. Statement of changes in owner’s equity Statement of financial position and notes to financial statements The information examined must be reliable and not false. However, financial statements can also use other criteria for management, such as cash basis or accounting criteria that are appropriate for certain types of organizations.
Operational Audit
An operations audit is a systematic examination of the operating procedures and work practices in an organization. To ensure that various processes are carried out efficiently according to the specified criteria. The advantage of auditing operations is that resources can be used efficiently. Makes the organization achieve results according to the set criteria.
Compliance Audit
A compliance audit is an examination of the policies, operations, and operations of an organization. Whether it complies with the laws and regulations or the various regulations of the organization’s policies or not. The results of the compliance inspection will be presented to the business’s senior management and disseminated to outsiders.
Special Audit
A special inspection is to check for wrongdoing that causes corruption in the organization. It is an in-depth audit that is usually performed by internal auditors. It occurs when there are issues within the organization such as corruption in the organization, business cases, or other special cases. However, in addition to the internal auditors An accounting office or external auditor can also perform special audits. When the account verification is complete. The audit team will make a report and send it to the audit committee and the company’s board of directors.
After knowing how many types of account verification there are. Let’s take a look at what auditing is like. Why do organizations need to have their accounts audited?
How important is auditing?
- Helps allocate various budgets within the organization more efficiently. Because auditing is the examination of income, expenses, production, and investments, which are important to the plan of a particular business.
- Reduce errors and financial risks in business operations Auditing the accounts will give an overview of the company’s financial situation and what kind of financial situation it is in.
- Help develop the organization Because the results of the accounting audit can be used to analyze and improve the company’s work to develop a more efficient business plan.
- Helps reduce corruption or fraud that may occur within the organization. Because there is a thorough audit of the account.
- Auditing helps organize bookkeeping. in order not to affect the company’s finances
At this point, I believe that many people will get to know more about accounting auditing. It can be seen that there are many types of auditing. Each type is different. The benefits of auditing will help your business to be successful and be able to use its resources efficiently. If you want to audit your account, you can also choose to use the services of an account auditing expert. We recommend CL Account.
