To clarify the subject “? ”, in today’s article, Ms. Uptalent will share with readers the 7 most popular types of audit. Please follow to find out what types of audits these are.
1- Audit of assets
2- Environmental audit
3- Compliance audit
4- Quality audit
5- Audit of information systems
6- Internal audit
7- Financial audit
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1- Asset audit
Asset Audit – What is an asset audit?
Asset auditing is the examination of the truth and reasonableness of assets included in a company’s financial statements.
The objective of an asset audit is to evaluate the adequacy and effectiveness of a company’s internal control process over assets. If the assets are recorded accurately, the financial statement is also accurate, ensuring that the business always operates stably.
In cases where assets are not recorded accurately, it can have a negative impact on the business. Furthermore, it can also lead to loss and deterioration of assets beyond any control.
The essence of an asset audit is to confirm whether the asset exists or not, what condition the asset is in, the age of the asset and the life cycle of the asset. At the same time, it also ensures that asset depreciation is carried out in accordance with regulations and business objectives.
Basically, fixed asset audit will bring companies the following benefits:
– Effective management of asset depreciation to help allocate asset costs appropriately.
– Removed ghost property. Phantom assets are items that are listed in the asset list but do not actually exist. Leaving this item in the report can harm the business.
– Ensure compliance with asset management regulations. If the regulations are violated, companies could face a significant fine.
Asset audits can include items such as land, head office buildings, fixed equipment used in offices, vehicles, construction costs, cost capitalization, etc.
Asset audits will be carried out by asset accountants or independent auditors.
2- Environmental audit
Environmental audit – What is environmental audit?
Environmental audit is a fairly broad concept. Its meaning will vary depending on the regulations of each country, organization, implementation objective or object to be audited.
There is currently no unified definition of environmental audit. However, people often use the ICC (International Chamber of Commerce) definition to discuss this issue.
The definition of environmental audit according to ICC is as follows:
“Environmental audit is a management tool that includes systematic assessment, periodic and thematic documentation to determine how organizational, management and environmental tools achieve results to ensure environmental safety. The environmental audit aims to:
– Facilitate the monitoring of environmental management in practice;
– Evaluate compliance with environmental regulations.
The aim of the environmental audit is to protect the environment, health and ensure safety during the work process. At the same time, it also helps companies monitor and manage environmental issues and ensure compliance with current regulations.
Currently, environmental audit is divided into the following types:
– Compliance review.
– Responsibility audit.
– Specialized audit.
Environmental audit of requirements related to raw materials, production processes, wastewater, emissions, production energy, etc.
3- Compliance audit
Compliance Audit – What is Compliance Audit?
Compliance audit is understood as the activity of auditing a specific object in terms of compliance with the rules, requirements and standards prescribed by the government.
In other words, the government will set requirements and hire auditors to evaluate whether units or organizations are complying with these requirements.
The objective of this type of audit is to determine whether the organization is complying with laws, regulations, rules, contractual terms or sponsorship agreements. Under AICPA regulations, compliance audits are often performed in conjunction with financial audits.
The Environmental Protection Agency (EPA) will send an internal auditor or hire an independent auditing firm to evaluate whether your plant is meeting waste disposal guidelines. It is the auditor’s responsibility to evaluate and report his or her findings.
4- Quality audit
Quality audit – What is quality audit?
Quality audit is an activity aimed at assessing an organization’s effectiveness and compliance with issues related to quality of work. Through the audit, companies will have the most objective evidence to evaluate and find ways to improve the quality of work.
Quality audits are carried out by experts so that the results of the audit have a very high level of reliability. This makes it an effective tool to help businesses ensure that operational resources and processes always operate efficiently and in strict compliance with regulations and quality standards.
By performing a quality audit, companies can keep their processes and products compliant with quality requirements. At the same time, it also helps improve the operational efficiency of companies and strengthen the objectivity and reliability of other information and data.
Quality audit can be the inspection and evaluation of supplier quality to ensure that the products and services ordered by the company will meet quality requirements. The audit will help the assessment results become more objective, more reliable and ensure the interests of the company.
5- Information system audit
Information systems audit – What is information systems audit?
Information systems auditing is an audit activity aimed at evaluating the management and control measures of a company’s IT infrastructure.
This type of audit aims to determine whether the company’s management system effectively and completely protects the security of assets and data.
Businesses can benefit from many important benefits by performing an IT audit, such as:
– Identify opportunities and risks.
– Evaluate, adjust, strategize and improve business procedures.
Typically, a company can perform this audit independently or in conjunction with a financial or internal audit process.
The information system audit process is always very complicated. Therefore, only CISA-certified auditors are qualified to perform this type of audit.
Information systems audits may focus on examining IT processes, specific areas of the business, or privacy rights regarding the control and use of data.
6- Internal audit
Internal audit – What is internal audit?
Internal audit is the activity of evaluating and verifying internal control processes, legal compliance issues and the management and protection of company assets.
The internal audit is carried out by experts within the company. Although these people are part of the company, they are required to remain independent of the activities they are auditing.
By effectively implementing the internal audit process, companies can accurately assess risks and find actionable measures to improve operational performance.
The results of the internal audit will be sent to the company’s management, board of directors or audit committee. From there, these agencies will know the current state of operations and have appropriate business development guidance.
Although internal audit can bring many benefits to companies, it cannot replace audit results according to widely accepted standards. Currently, the job of the internal auditor is to coordinate with the independent auditor throughout the audit process.
The internal audit may consist of a daily assessment of the production process to ensure that the quality of the product is always under strict control. Or periodically audit the performance of the human resources recruitment process at the end of the year.
7- Financial audit
Financial audit – What is financial audit?
A financial audit is the examination and expression of an opinion on the reasonableness of the financial statements and whether the financial statements have been prepared in accordance with applicable criteria. This form of audit is also known as a financial statement audit.
Usually, the criteria for reviewing financial statements are accounting standards. In addition, auditors may also perform financial audits on a cash basis or other accounting basis appropriate to the business.
To make a final assessment as to whether the financial statements are true and fair or not, the auditor will need to gather relevant evidence to determine whether the report contains material errors or other errors or not.
The opinion on the honesty and fairness of the financial statements is only at a relative level and not absolute. Accordingly, auditors will rely on key factors to conclude on the veracity and reasonableness of the report.
In general, the primary objective of a financial audit is to provide an independent and objective review of financial statements. Thus, financial reports become more reliable for stakeholders, minimize risks for investors and reduce the capital cost of financial reporting subjects.
Typically, a financial audit will be necessary when a company wants to seek outside investors, financial sources for expansion or mergers and acquisitions. At that time, the auditor’s opinion will become an important basis for the parties involved to make decisions.
Businesses will need to conduct a financial audit when they need to get approval for a loan or credit limit from a bank. This is a mandatory requirement that banks impose on any business or organization wishing to obtain a loan or extend a line of credit.
Hopefully, the information on the 7 most common types of audit in this article by Ms. Uptalent has helped you better understand what audit is. Don’t forget to follow Uptalent to update many other useful knowledge. Good luck!
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