What are the different types of audits, and what should you be getting? Audits are an essential part of any business. They help ensure that your company is operating as efficiently as possible, and they can also protect you from fraud or theft.
A country like Singapore, with all the different types of businesses running through its veins, also has different kinds of audits being conducted day in and out. But what types of audits do you need? How do they differ? And what should you be getting out of a self or a third-party audit service provider?
That’s what we’ll discuss in this audit service checklist. Read on – Types Of Audits
A financial audit is an independent and objective examination of a business’s financial statements to ensure reliability and integrity, ensuring that the information presented in these statements is true and accurate.
Financial audits are generally performed by accountants or accounting firms on behalf of companies to help them meet statutory requirements and confirm that they comply with laws and regulations. Financial audits do not detect fraud or check for compliance with laws or regulations; they only verify whether the company’s accounting records have been recorded correctly and all figures balance appropriately against one another.
Additionally, because financial audits are concerned solely with reviewing accounts receivables, inventory levels, and capital assets such as machinery—not their underlying assets—they cannot give you any indication as to whether your company has been producing goods or services at all!
Operational audits are designed to assess the effectiveness of an organization’s operations. These include processes, procedures, and controls that have been put in place by management to ensure efficient and effective operations.
Operational audits are usually performed by an internal auditor who has knowledge of the organization’s systems and controls but may also be performed by independent auditors when necessary.
Operational audits usually focus on evaluating whether your organization is achieving its goals efficiently and effectively by examining whether it follows well-defined policies, procedures, or plans. These kinds of audits are often conducted periodically (e.g., quarterly or annually) as part of your overall risk management program to identify opportunities for improvement within your business processes.
A compliance audit is performed to ensure that the organization follows all of its regulatory requirements. Compliance audits can be internal or external and are designed to assess whether an entity is compliant with laws, regulations, and policies.
This can be applied to many industries and businesses wherein the things and services they handle have national or international regulations. Such as chemicals, currencies, food, and even if the corporation is adhering to human and labor rights.
IT audits are performed to ensure that IT systems are secure, reliable, and cost-effective. They can be performed on a variety of systems, including:
IT audits play a massive role in keeping our virtual infrastructure in place, which is why it is vital to take note of an audit service checklist in Singapore when it comes to this.
A fraud audit is a type of internal audit that focuses on detecting and preventing accounting fraud. Fraud audits are typically performed by an accounting firm or consulting firm but can also be conducted in-house.
Depending on the size of your organization, it may be beneficial to perform your fraud audit if you have enough internal resources available to do so. Fraud auditors will help you uncover suspicious activity, including:
Administrative audits are done to ensure that the organization is following its policies and procedures. They often involve a review of internal controls, which can include physical controls (such as locks on doors) or operational controls (like procedures for handling cash).
Administrative audits can be conducted in-house or by an external audit service checklist in Singapore.
For example, a bank might have an internal auditor who examines whether customer deposits are deposited into the correct bank accounts at the end of each business day; this could be considered an administrative audit because it’s focused on ensuring compliance with regulations and laws than evaluating financial statements.
Businesses of all sizes use audits, but the type of audit you should be getting depends on a few factors.
A self-audit is easy, and you can follow the checklist provided, although it can be questioned for authenticity and reliability since you or your company did it. Having an external or third-party audit service provider will help in taking away any possible cloud of doubt on the audit’s authenticity and reliability.
In terms of the size of your business, if you’re a small business owner, it may make sense to only get an external audit once every 3 years or so.
However, if you’re running a large enterprise with thousands and thousands of employees and multiple branches around the world, then perhaps it would be best for your CFO to hire someone internally who knows precisely how things work at his company.
In addition to this factor, other considerations will affect which type of audit you need: industry (manufacturing, healthcare), size (one branch or several), and location (remote or regional).
In a nutshell, there are many types of audits out there that can help you get the most for your money. Whether it’s about compliance or ensuring your books are in order, an audit is something everyone needs at some point.
What type will work best for you depends on what type of business you have and what goals you want to achieve?
But the audit doesn’t stop from when it is done. After you receive your audit report on whatever it is about, you must implement actions and long-term plans to curve any possible errors, start investigations into any anomalies found in the audit, and make improvements and innovations in processes that are not productive.
An audit is just one tool to ensure things are in place and make you aware that things need to be updated and changed for productivity and compliance.