An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law.
Any subject matter may be audited. Auditing is a safeguard measure since ancient time. Audits provide third party assurance to various stakeholders that the subject matter is free from material misstatement. The term is most frequently applied to audits of the financial information relating to a legal person.
As a result of an audit, stakeholders may effectively evaluate and improve the effectiveness of risk management, control, and the governance process over the subject matter. Other areas which are commonly audited include: secretarial & compliance audit, internal controls, quality management, project management, water management, and energy conservation.
Internal audits evaluate a company’s internal controls, including its corporate governance and accounting processes. They ensure compliance with laws and regulations and accurate and timely financial reporting and data collection, as well as helping to maintain operational efficiency by identifying problems and correcting lapses before they are discovered in an external audit.
Concurrent audit means doing the examination of the financial transactions at the time of happening or parallel with the transaction. It is part of a bank’s early warning system to ensure timely detection of irregularities and lapses. It helps in preventing fraudulent transactions at branches.
A statutory audit is a legally required review of the accuracy of an Entity’s financial statements and records.The purpose of a statutory audit is the same as the purpose of any other type of audit: to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.
Stock Audit is a physical verification of quantities and condition of items held in warehouse. The intention behind this check is to provide an audit or to know the position of existing stock.
Due Diligence Audits
Due diligence is an investigation or audit of a potential investment or product to confirm all facts, such as reviewing all financial records, plus anything else deemed material.It refers to the care a reasonable person should take before entering into an agreement or a financial transaction with another party.
Information Systems Audits
Information Systems Audit, is an examination of the management controls within an Information technology infrastructure. The evaluation of obtained evidence determines if the information systems are safeguarding assets, maintaining data integrity, and operating effectively to achieve the organization’s goals or objectives.
Revenue Leakage Audits
Revenue leakage Audit is to find loss of various charges/fees or income from inconsistent practices, lack of attention to detail, and poor pricing controls.Revenue leakage can occur in all areas of a business. Both commercial and retail customers could be contributing to loss of income.
A tax audit is an examination of an organization’s or individual’s tax return to verify that financial information is being reported correctly. While the chances of being selected for closer scrutiny are comparatively low.