Types of Audit

Audit is necessary in order to verify whether a company has prepared its accounts properly or not and also whether they reflect true and correct picture of company’s financial position. Given below are the various types of audit which happens in normal course –

  1. Statutory audit – This refers to that inspection which is compulsory and it has to made by every company if it falls under that category of companies which requires audit, failure to comply can lead to penalties on the company.
  2. External audit – It refers to that under which an outside group or person check the books of accounts in order to see whether they are accurate or not.
  3. Internal audit – These are done by the company staff and they are primarily for organization internal use so that they can rectify errors before company final accounts are prepared and there results are not published outside.
  4. Special audit – These are conducted in order to find any specific errors or irregularities in the financial statements of the company. Alternatively it may also involve specific department or business unit if company has multiple business units.
  5. Management audit – This has emerged only few years back, it refers to appraisal of organization top management in order to see whether they have performed their duties and responsibilities towards both company as well as its shareholders well or not.

Apart from above there are many audits like environmental, cost, financial statements, production, quality etc…

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