TYPES OF AUDITS AND AUDITORS (STUDY OBJECTIVE 2)
An audit is a type of assurance service that involves accumulating and analyzing support for information provided by others. The main purpose of the audit is to assure users of financial information about the accuracy and completeness of the information. To carry out an audit, accountants collect and evaluate proof of procedures, transactions, and/or account balances and compare the information with established criteria. The three primary types of audits include compliance audits, operational audits, and financial statement audits. Although all audits involve an investigation of supporting information, each type of audit has a different purpose. Compliance audits determine whether the company has complied with regulations and policies established by contractual agreements, governmental agencies, company management, or other high authority. Operational audits assess operating policies and procedures for efficiency and effectiveness. Financial statement audits determine whether the company has prepared and presented its financial statements fairly, and in accordance with established financial accounting criteria.
Audits are typically conducted by accountants who have knowledge of the established criteria. For example, financial statement audits are performed by certified public accountants (CPAs) who have extensive knowledge of generally accepted accounting principles (GAAP) in the United States and/or International Financial Reporting ...
