Auditing can be regarded as the on-site verification exercise, like the inspection of a particular quality system or a process, to ensure total adherence to certain requirements. An audit may be relevant to an organization as a whole or might be intended for a function, process, or a production step. Some audit firm in Singapore has unique administrative goals, like auditing documents, risk, or performance, or monitoring finished corrective actions.
In other words, a financial audit is the thorough scrutinization or examination of the financial statements of an organization to ensure that the financial records are correct and fair representation of the financial transaction to claim to carry out.
Majority of all the companies get an annual audit of their financial statements, like the income statement, balance sheet, including cash flow statement. Lenders always ask for the results of an external audit yearly as part of their debt agreement. Auditors are usually in charge of auditing, and they offer a wide array of auditing services. Below are the types of audits:
1. Compliance audit
This type of audit is the inspection of the procedures or processes of an organization or an individual to determine if it conforms to the laid down internal or regulatory standards. This type of audit is mostly utilized in regulated industries or educational institutions.
2. Construction audit
Construction audit is the evaluation of the cost incurred for a certain construction project. Activities carried out in this type of audit may include an analysis of various contracts given to contractors, the price paid, overhead costs allowed for reimbursement, modified orders, and how fast the project was completed. The intention of those activities is to make sure that the incurred costs for the construction project were fair.
3. Financial audit
Financial audit is the evaluation of the authenticity of the information presented in the financial statement of an organization. This procedure is usually performed by a CPA firm, which is independent on the review of the organization. This type of audit is regarded as the most commonly conducted.
4. Information system audit
This type of audit entails the review of the controls over software development, data processing, and approach to computer systems. The purpose of this type of audit is to discover any problem that could damage the ability of IT systems to offer its users correct information, as well as to make sure that unauthorized individuals are barred from having access to the date.
5. Investigative audit
Investigative audit is a detailed examination of a particular area or individual when the suspicion of an inappropriate or fraudulent activity arises. The purpose of this type of audit is to find a remedy and control breaches, and to obtain necessary evidence in case charges are to be brought against an individual or organization.
6. Operational audit
This type of audit is a detailed evaluation of the aims, planning process, procedures, and outcomes of the activities of a particular business. The audit may be carried out internally or by an external organization. The intended outcome is an evaluation of operations, with probably few recommendations for enhancement.
7. Tax audit
This type of audit is known as the analysis of the tax returns tendered by a person or a business entity, to determine if the tax information and other resulting income tax payment provided are correct or genuine. Tax audits are normally targeted at returns that lead to a very low tax payment, in order to determine if an extra examination can be carried out.
An audit can be carried out internally by employees of an organization or by an external certified auditor from an accounting firm in Singapore, depending on your location. Regardless of whether it’s done internally or externally, auditing is an extremely important procedure that requires a high level of professionalism. If you have more questions regarding auditing, please feel free to get in touch with us.