This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
There are many types of audits in the accounting and auditing field. Each of them carries different function to the government, company and individuals. However, they are the people who ensure all the information in the financial statements is follow the guideline of those accepted accounting and audit standards. They are not assigning to find out the fraud, abuse and program non-compliance. Instead, their role is to ensure that the financial statement is fairly presented. (Brook, EXPLORING THE VALUE OF Financial Statement Audits, 2011)
This type of audits is focusing on examining the adequacy of the internal controls processes, which include the recording, accounting and reporting of the business transactions. They also make sure that the transaction is recorded based on the Generally Accepted Accounting Principle (GAAP). It will evaluate the accuracy and reliability of the financial statement by checking through the evidence of the transaction, such as receipt, invoice and bills. It can also evaluate the economic activity of the company through the revenue and expense cycles, which include the sale and purchasing. The auditor will more concern about the control of the assets in order to safeguard the assets of the particular company.
INFORMATION SYSTEMS AUDITS
This type of audits is address on the automated information processing systems and computer-based system's elements. It evaluates the input, processing control, output, security, backup and recovery plans and so forth. Besides, it also focuses on the constructive improvement, so that the processing system can be carry out more efficiently. In this audits, they need to perform general controls review, application controls review and system development review. General controls review manage the development, operation of the application system and evaluate the data center, operating system, security software and so forth. Application controls review is controls of the specific application system such as input, processing and output of the systems. System development review is about the development of new application system and usually there is a new operating environment or technical platform needed.
This is a comprehensive review of the internal operations of a company whether they are following the rules and regulations. Usually, this kind of auditing is verified by the regulatory body. For a departmentalization company, several auditors are needed for auditing the operation of each of the department. The auditor will have a meeting with the head of department or manager to confirm the information of employees who just added or leaved the company and the information of the admin staff that are allow accessing to the critical systems. In order to facility the process, event log management software is prepared for the auditor to get the proven and evidence of the company that they are in compliance.
This is an audit that focus on evaluate the effectiveness of the corrective action. They need to ensure that the action plans that recommended is carry out within the time frame. The follow-up audit may discuss with the previous auditor who give the recommendation, check the document and the performance of the employees to evaluate the progress of the corrective action. This type of audit is important for the company to manage their business as stated in the mission and vision. This is due to the corrective action can be implement comprehensively and effectively when there is some problems happen.
When there is a criminal case such as fraud, embezzlement, money laundering and other financial claims, the audit needs to collect the forensic evidence which is reliable for the use in court. They are able to calculate the losses that result of the financial case. The company hires the forensic audit to check their employees and managers whether they have involved in the illegal case and inappropriately use of the resources. The improvement of transparency of the ways resources used can minimize the fraud case and potential of the interest conflicts happen. According to R.A. Anderson, eHow Contributor, a forensic auditor can conduct research on laws and regulations and thus prepare written reports to give recommendations. (Anderson) This shows that, forensic audit is important for the development of laws and regulations.
This type of audits also called as performance audit. It is focus on whether the company had fully utilized their resources and used it in the efficient and effective way to achieve their mission and vision. Their also concern about whether the ways of operation or practices of the employees is according to the established goals and plans. This can ensure that their mission can be achieved. The data and sources used are the operational policy and achievement that is related to company's goals.
G.EXPLAIN THE MEANING OF TRUE AND FAIR VIEW
"True and fair view" is one of the accounting concepts applied to ensure that the financial report is relevance and reliable. The company should prepare their financial report according to all the accounting principle and thus, the principle of "true and fair view" can be achieved automatically. It promotes that the company should appropriately disclose their accounting information and not all the truth about the company. It means that they can make some judgment and estimation in the report such as provision of doubtful debt, as prudence is also one of the accounting principles. When the financial report is verified by an audit and fulfills the criteria of understandability, relevance, consistency, comparability, reliability and objectivity, it can be considered as a "true and fair view".
Anderson, R. (n.d.). Forensic Audit Definition. Retrieved 11 11, 2012, from eHow: http://www.ehow.com/about_5031886_forensic-audit-definition.html
Brook, D. A. (2011). EXPLORING THE VALUE OF Financial Statement Audits. The Journal of Government Financial Management, 38-43. Retrieved 11 11, 2012, from http://search.proquest.com.libezp.utar.edu.my/docview/857667445/139F68FA7CE4665B03/1?accountid=50207
Riley, J. (2012, September 23). Accounting Concepts and Conventions. Retrieved 11 11, 2012, from Tutor2u: http://www.tutor2u.net/business/accounts/accounting_conventions_concepts.htm
Rouse, M. (2010, May). compliance audit. Retrieved 11 11, 2012, from http://searchcompliance.techtarget.com/definition/compliance-audit
True And Fair. (2011, July). Retrieved 11 11, 2012, from Financial RepoRting council: http://www.frc.org.uk/FRC-Documents/FRC/Paper-True-and-Fair.aspx
TRUE AND FAIR VIEW DEFINITION. (n.d.). Retrieved 11 11, 2012, from http://www.ventureline.com/accounting-glossary/T/true-and-fair-view-definition/
Types of Audit. (n.d.). (U. o. Alberta, Producer) Retrieved 11 11, 2012, from http://www.internalaudit.ualberta.ca/en/TypesofAudit.aspx
Types of Audits. (n.d.). (University, Carnegie Mellon) Retrieved 11 11, 2012, from http://www.cmu.edu/finance/audit-services/internal/types-of-audits.html
Types Of Audits. (n.d.). (C. S. UNIVERSITY, Producer) Retrieved 11 11, 2012, from http://www.csus.edu/aba/audit/Types-of-Audits.html
Types of Audits and Reviews. (n.d.). (C. S. University, Producer) Retrieved 11 11, 2012, from http://daf.csulb.edu/offices/univ_svcs/internalauditing/audits.html