An audit is defined as an independent examination of the financial statements of an organization to make sure that the records are a fair and accurate representation of the transactions they claim to represent.
There are many different types of audits that can be performed in the United States. financial audits, operational audits, compliance audits, and Sarbanes-Oxley audits are just a few. Audits are performed to assess risk, ensure compliance with laws and regulations, and protect the assets of an organization. Audits can be performed by internal auditors or external auditors. Internal auditors are employees of the organization being audited. External auditors are independent professionals who are hired by the organization being audited. Audits are typically conducted on an annual basis but may be conducted more frequently if there are significant changes within the organization, or if the results of previous audits were unsatisfactory. Audits typically begin with a planning phase, in which the auditors develop a scope and objectives for the audit. They will then collect data and evidence through interviews, document review, and observation. After the data is collected, the auditors will analyze it and develop conclusions and recommendations. The results of the audit will be reported to the organization’s management.
There are many different types of audits that can be performed on a company, but there are some general regulations that must be followed in order to ensure that the audit is conducted properly. First and foremost, the auditor must be independent from the company being audited. This means that the auditor cannot have any financial or personal interests in the company. Second, the auditor must have access to all of the company’s financial records. Third, the auditor must follow generally accepted auditing standards. Finally, the auditor must provide a report to the company detailing the findings of the audit.
Audits are usually conducted by an outside firm, but they can also be conducted internally by the organization’s own staff. The Sarbanes-Oxley Act of 2002 requires that all public companies in the United States have their financial statements audited by an independent registered public accounting firm. The act was passed in response to a number of corporate scandals, such as the Enron scandal, in which companies falsified their financial statements in order to mislead investors. Audits are also conducted by the IRS to ensure that businesses are paying the correct amount of taxes. The IRS audited about 1% of all individual tax returns in 2018, and about 0.5% of all business tax returns.