Auditing: The unconventional Types Now – Generally what is known as auditing is financial audit. Then business entrepreneurs know about tax audit. Again, professionally there is this knowledge about internal and external audit. Yet there are other types of audit that are unconventional. These unconventional audits are becoming a big challenge for some individuals to understand.
In a recent concluded seminar on Unconventional Audits and how it affects operations, there arose a misunderstanding and misinterpretation of certain of these unconventional audit exercises. And because it’s becoming a social challenge, that’s why we have taken it up to make this post of clarifications on these auditing concepts. This post therefore, will be of great help to accounting and auditing students and a good eye-opener for certain entrepreneurs. So, if you fall into these categories, please read on, the solutions to your challenges are here.
Types of Unconventional Audits:
We have here over six of this type of audit. The regular audit re covered in our previous post. Our approach here is to define and give details of the peculiarities of the particular audit. You should also be able to click some related links to be able to make a good understanding of this subject matter.
Integrated Auditing: The unconventional Types Now
Integration means bring together all component parts to work as a system. So, when an organization embarks on integrated audit, it means it wants to find out or fine tone the working of its organizational financial recording structure. Therefore, it deals primarily with how an organization monitors and controls its financial accounting and reporting system. This becomes imperative because auditors adhere to strict guidelines or auditing standards. So, this is to ascertain and evaluate how a company oversees transactions, financial processes and operations.
This audit is not a normal audit. It’s an audit carried out even after a normal audit is done. So, it’s highly technical. In fact, it’s an audit often conducted as part of a criminal or civil investigation. These type of auditors must be vast in accounting and investigative procedures. This’s because, the results of this type of audit may be used as evidence in legal proceedings. It may also be used to resolve disagreements. Such disagreement between corporations or company shareholders. In this case, it’s applied as a conflict resolution mechanism.
Furthermore, these audits re conducted to comply with government regulations. So, it’s applicable to public companies, banks, investment firms and insurance companies. This audit is usually done by external auditors,. So. it’s referred to as external audit. The main purpose is to verify management financial reports to confirm if they are accurate, complete, fair and compliant.
As a matter of fact, many government agencies undergo statutory audits. And, the findings re made available to the public. This action tends to improve transparency and public trust.
Value for Money Auditing: The unconventional Types Now
This is another unconventional audit. It’s an audit usually conducted in non-profit organizations. The purpose is to assess resource management and operations. The 3 components of value for money audit to evaluate are;
- Economy: Using this parameter auditors review how such organization acquire and distribute its resources.
- Effectiveness: Value for Money audits evaluate the efficient usage of resources. Effective management of resources must indicate how organizations utilizes its resources in meeting up with its overall financial and operational goals.
- Efficiency: Efficiency shows how more outputs or results re obtained using a standard resource. Therefore, auditors analyzes operation’s processes and systems for productivity.
This is related to cost-benefit analysis. Therefore, the value expended must relate to value produced using the resources expended.
Agreed-upon procedures audit:
During an agreed-upon procedures (AUP) audit, the parties involved agree on certain terms. So, the requesting party and conducting party must agree on how to carry out the audit. Usually, AUP audits re used to evaluate a specific process or procedure. In this regard too, the results of such audit re only shared between the parties named in the agreement.
This is also relevant for due diligent evaluations for acquisitions and merger. In AUP audit reports, auditors share objective information rather than recommendations or opinions.
Special Auditing: The unconventional Types Now
Special audits are sporadic internal audits. They usually focus on a narrow function or process within a company. Special audit is usually authorized by company owners, shareholders or upper-level management. Sometimes, this is when there is an allegation for fraud or misconduct.
Special audits may investigate such areas as;
- Safety compliance
- Hiring procedures
.Do you know the importance of related topics in this posts? They re the links you required to broaden you knowledge on the subject matter under discussions. You have to click and read them to help yourself. These things are free. We spend time, money and efforts to make them available to you. Just read on.
- Different types of audit
- Importance of Auditing system for Your Company
- Why Need Internal Auditing Your Business?
- Why Do You Need External Auditing Your Business?
- DOES AUDITING AND ASSURANCE SERVICES COMPARE
- How Much Do You Need Accounting and Auditing Services?
- How to Prepare Business Plan Financial Analysis Segment.
- Business Plan Financial Templates
Summing Up Auditing: The unconventional Types Now
In our previous article we indicated that in the midst of internal and external audit which re non-statutory and statutory audit, any other form of audit can be conducted. Here therefore, has been a lot of these special audits which fall into internal or external audits. And are there either statutory or non-statutory. We present this article as a solution to all those confusions imposed by biased expressions of what audit is.
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Founder/Managing Partner of Complete Full Marks Consultants Ltd. An Economist turned Chattered Accountant and Tax Practitioner with over 37 years of industrial experience.