Audit Objectives of Different Types of Audit
An audit is a systematic assessment of the books of accounts (Also see Why Do the Accountants Close the Books?) as well as other documents of a company. The primary objective of conducting the audit is to know whether the financial statements the company has prepared and presented illustrate its true and fair view.
An audit aims to provide a reasonable assurance that the financial statements of the company have no material misstatements. Then, the auditors will issue a report about the company’s financial statements based on auditor’s findings. The audit is a systematic and independent assessment of a company’s financial statements. Also, it is a detailed inspection of the accounting records like purchases and sales, as well as the income and expense report.
As there are various types of audit (Also see The Benefits of Engaging a Non-statutory Audit), the audit objectives may change accordingly. Listed below are the audit objectives of different types of audit:
– External audit: This type of audit aims to make sure that the financial statements that the management of the company has prepared provide a true and fair view of the company. Also, they should prepare financial statements based on the applicable auditing and accounting standards.
– Internal audit: Internal audits (Also see The Importance of Having Internal Audits) allow the auditors to check the company’s compliance with policies, its internal contr4ol over financial reporting, as well as its compliance with the legal aspects, for example, whether the organisation adheres to the Companies Act.
– Forensic audit: This kind of audit helps in recognising fraud cases. It will also help in controlling and cutting down the fraud cases in a company if the management applies internal audit control as well as recommendations and suggestions.
– Statutory audit: This is for the auditor to check whether the company is following the applicable rules and regulations of the Act that it is registered. Besides, according to that Act, the company needs to appoint a statutory auditor to perform the statutory audit.
– Financial audit: The company needs to obtain reasonable assurance that there are no material misstatements in the company’s financial statements.
– Tax audit: The tax audit (Also see Types of Audit – Tax Audit) is to ensure the company has maintained its books of accounts as well as other documents with similar nature. Also, the tax auditors are responsible for making sure that the company has kept proper records of income besides maintaining clear records of tax expenses and deductions.
– Special audit: The auditors will conduct such type of audit if it is required by law. The objective of the special audit will change according to the law too.
The business owners need to hire some experienced staff from audit services in Johor Bahru to help in conducting the internal audit. This is because if the internal auditors can find out the mistakes, fraud, and so on, the company will be able to initiate some actions to deal with such situations internally. In an audit, the auditors should express audit opinion after considering the audit objectives. Also, they need always to remind themselves of the audit (Also see Advantages of Performing Continuous Audits) objectives when they perform an audit because if they do so, they will be able to find out accurate information, as well as any errors or frauds.