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An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon." Auditing also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditors consider the propositions before them, obtain evidence, roll forward prior year working papers, and evaluate the propositions in their auditing report.
A financial audit is conducted to provide an opinion whether "financial statements" are stated in accordance with specified criteria. Normally, the criteria are international accounting standards, although auditors may conduct audits of financial statements prepared using the cash basis or some other basis of accounting appropriate for the organization. In providing an opinion whether financial statements are fairly stated in accordance with accounting standards, the auditor gathers evidence to determine whether the statements contain material errors or other misstatements.
An auditor's report is a formal opinion, or disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit, as an assurance service in order for the user to make decisions based on the results of the audit.
An information technology audit, or information systems audit, is an examination of the management controls within an Information technology (IT) infrastructure and business applications. The evaluation of evidence obtained determines if the information systems are safeguarding assets, maintaining data integrity, and operating effectively to achieve the organization's goals or objectives. These reviews may be performed in conjunction with a financial statement audit, internal audit, or other form of attestation engagement.
Statement on Auditing Standards No. 99: Consideration of Fraud in a Financial Statement Audit, commonly abbreviated as SAS 99, is an auditing statement issued by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) in October 2002. The original exposure draft was distributed in February 2002. Please see PCAOB AS 2401.
Audit management is responsible for ensuring that board-approved audit directives are implemented. Audit management helps simplify and well-organise the workflow and collaboration process of compiling audits. Most audit teams heavily rely on email and shared drive for sharing information with each other.
An information security audit is an audit of the level of information security in an organization. It is an independent review and examination of system records, activities, and related documents. These audits are intended to improve the level of information security, avoid improper information security designs, and optimize the efficiency of the security safeguards and security processes. Within the broad scope of auditing information security there are multiple types of audits, multiple objectives for different audits, etc. Most commonly the controls being audited can be categorized as technical, physical and administrative. Auditing information security covers topics from auditing the physical security of data centers to auditing the logical security of databases, and highlights key components to look for and different methods for auditing these areas.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is an organization that develops guidelines for businesses to evaluate internal controls, risk management, and fraud deterrence. In 1992, COSO published the Internal Control – Integrated Framework, commonly used by businesses in the United States to design, implement, and conduct systems of internal control over financial reporting and assessing their effectiveness.
Enterprise risk management (ERM) in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives, assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring process. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall.
Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory. In the United States, the standards are promulgated by the Auditing Standards Board, a division of the American Institute of Certified Public Accountants (AICPA).
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Internal auditing might achieve this goal by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity.
Audit evidence is evidence obtained by auditors during a financial audit and recorded in the audit working papers.
Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization.
In financial auditing of public companies in the United States, SOX 404 top–down risk assessment (TDRA) is a financial risk assessment performed to comply with Section 404 of the Sarbanes-Oxley Act of 2002. Under SOX 404, management must test its internal controls; a TDRA is used to determine the scope of such testing. It is also used by the external auditor to issue a formal opinion on the company's internal controls. However, as a result of the passage of Auditing Standard No. 5, which the SEC has since approved, external auditors are no longer required to provide an opinion on management's assessment of its own internal controls.
An Investment policy statement (IPS) is a document, generally between an investor and the assisting investment manager, recording the agreements the two parties come to related to issues relating to how the investor's money is to be managed. In other cases, an IPS may also be created by an investment committee to help establish and record its own policies in order to assist in future decision-making or to help maintain consistency of its policies by future committee members or to clarify expectations for prospective money managers who may be hired by the committee.
An entity-level control is a control that helps to ensure that management directives pertaining to the entire entity are carried out. These controls are the second level to understanding the risks of an organization. Generally, entity refers to the entire company.
The chief audit executive (CAE), director of audit, director of internal audit, auditor general, or controller general is a high-level independent corporate executive with overall responsibility for internal audit.
A scope limitation is a restriction on the applicability of an auditor's report that may arise from the inability to obtain sufficient appropriate evidence about a component in the financial statements. When all the audit procedures that are considered necessary, either by circumstances, engagement, or client limitation, the audit is limited in scope.
Audit technology is the use of computer technology to improve an audit. Audit technology is used by accounting firms to improve the efficiency of the external audit procedures they perform.
References
- ↑ "Nepal Standards on Auditing (NSA) 300, 'Planning an Audit of Financial Statements'" (PDF). Auditing Standards Board (AuSB), Nepal. 2016-07-16. Archived (PDF) from the original on 2012-10-24. Retrieved 2021-11-19.
- ↑ Vitez, Osmand. "What is an Audit Plan? (with pictures)". Smart Capital Mind. Retrieved 2021-11-19.
- ↑ "AS 2101: Audit Planning". Public Company Accounting Oversight Board. Retrieved 5 August 2010.