The 3 main types of audits are financial, compliance, and operational. Each type of audit is designed to assess financial records and accounting statements to determine whether they are accurate. Some types of audits also have a specific purpose, such as tax matters or forensic accounting.
Financial Audit: This is one of the most common types of audits and is often conducted by an outside entity like an accountant or tax agency. The results of these audits can help companies to make better decisions.
Internal Audit: An internal audit is conducted by a person employed within the company and involves looking at internal processes, policies, and procedures. Typically, these audits are carried out at regular intervals to ensure that the company is operating as efficiently as possible.
Compliance Audit: This type of audit is used to ensure that a business is in compliance with government standards and regulations. This can include things like worker’s compensation guidelines or IRS regulations.
Pay Audit: This type of audit is often performed to identify any unequal pay practices within a company. This is a great way to ensure that all workers are paid fairly.
Forensic Audit: This type of audit is usually done when there are cases of fraud or other financial crimes. It helps to find any evidence that can be used in a court case.
After completing an audit, an auditor submits a report to the company. The document includes a title, an opinion, and the official signature of the auditor. The auditor’s opinion can indicate if the company is in compliance with generally accepted accounting principles (GAAP).
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