Auditing
Independent Examination of Financial Statements
An audit is an independent examination of the financial statements of an entity, regardless of its size or profitability, to express an opinion on the fairness of the statements.
Purpose of an Audit
An audit plays a crucial role in establishing the credibility of financial statements and instilling confidence in shareholders regarding the accuracy and fairness of financial accounts. Additionally, audits contribute to the enhancement of internal control systems.
Types of Audit
Internal Audit
The Internal audit entails a comprehensive internal evaluation of controls encompassing risk management, internal controls, corporate governance, and accounting processes, conducted by a team of qualified professionals, such as Certified Internal Auditors (CIAs) and Chartered Accountants (CAs).
Purpose: Internal audit provides a valuable service to management and the Board of Directors by identifying potential issues and recommending corrective actions before they become significant problems
External Audit
An external audit is conducted by an independent third-party professional who objectively evaluates an organization's financial records. They assume responsibility for their client's accounts and financial statements, preparing unbiased reports of financial matters, including identifying any irregularities.The primary purpose of an external audit is to enable auditors to conduct audits of financial statements using financial accounting principles, forming an opinion on whether the financial statements are fairly and accurately presented.
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