Auditing

Auditing

Auditing

Auditing can best be defined as an independent attempt at verifying the credibility of reported information or company results. Two aspects are central to the practice of auditing: independence and credibility. This has become much more important since there is an increase in the number of stakeholders who demand independent and credible information, as well as good corporate governance. A professionally conducted audit by an accredited organisation such as Strategic Accounting Services can satisfy these auditing needs.

Auditing and Professional Registration

Overseeing the professions of auditing and accounting is often managed by the same professional body. There are currently a number of government approved organisations in various countries responsible for the professional accreditation of auditors, such as:

Internal Auditing

The Chartered Institute of Internal Auditors (UK) summarises the role and purpose of internal audit as the provision of “independent assurance that an organisation’s risk management, governance and internal control processes are operating effectively.” This goes beyond merely looking at financial statements and information. It provides members of the boards and senior management with assurance that helps them fulfil their duties to the organisation and its stakeholders.

Internal auditors usually report to the board and senior management as specified by the governance structure of an organisation. Apart from financial issues, internal auditors also consider wider issues e.g. the organisation’s reputation, growth, its impact on the environment and relations with employees.

The fundamental purpose of internal auditing is improvement. The intention is that it is done through mentoring and coaching. The idea is not undermine or police existing management responsibility and structures.

Internal Auditing and Cloud Based Services

Very similar as in the case of cloud based accounting, cloud based services can be used to facilitate the process of internal auditing. The following purposes can be achieved through a cloud based auditing system:

  • Information sharing: It provides a platform for instant information sharing between auditors.
  • Auditing reports can be generated automatically.
  • Formalising of auditing tasks can be achieved.
  • Linkages with other systems can be set up.
  • Action and task plans can be generated.

Advantages of Cloud Based Internal Auditing

Cloud based auditing systems can facilitate benefits such as:

  • Increased productivity.
  • Smooth cooperation between auditing and operational teams.
  • More reliable and standardised information and reporting.
  • Linkage between auditing tasks to required control activities and risk coverage.
  • improved IT governance

External Auditing

External auditors are employed by shareholders, owners or members who are outside an organisation’s governance structure. The external auditor’s report serves as a professional opinion on reports which mainly cover financial information. They work to internationally agreed auditing standards. Unlike internal auditors they are not responsible for implementing any improvements. There are three primary types of audits:

Financial Audit

An organization needs to prepare financial statements in accordance with generally accepted accounting principles (GAAP). The auditor of a financial statement gathers evidence through various means and attests to the degree of correspondence between the audited financial statements and GAAP.

Operational Audit

Policies and operating procedures are designed to ensure effective and efficient operations which comply with legal requirements. An organisation’s operations need to be conducted in accordance with these established policies and procedures. An auditor can gather and assess evidence and then attest as to whether or not this is so. Thus changes to improve operations can be recommended.

Compliance Audit

All organisations are required to comply with a myriad of laws and/or regulations. Compliance auditing is aimed at verifying the degree of correspondence between an identified practice and the specific law and/or regulation which governs it. As such, the compliance auditor provides assurance that a company or person complies with the applicable law(s) and/or regulation(s).

It is important to consider the role of auditing within one’s company, as well as the greater legal an environmental context. Consulting an organisation like Strategic Accounting Services one can determine how to apply internal and external auditing within your business. Ultimately this will not only result in valuable insight, but also improved profitability.

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