What is Accounting Auditing?

by Shawn William Creative Writer

Auditing is a part of accounting that is an independent examination of financial information of any entity and physical inspection of its assets. Auditing is done to settle if the company or business in question has followed its operations to the laws and the commonly accepted accounting ideologies.

What is auditing?

Auditing typically refers to an objective examination and evaluation of a company's financial statements, usually performed by an external third party. Auditing ensures that the economic reports are an honest and genuine representation of the transactions they claim to represent. The audit can be conducted internally by employees of the organization or externally by an outside CPA (Certified Public Accountant) firm like tax accountants Cardiff.

Types of Audits

· External Audits- External auditing means auditing performed by outside parties. It is incredibly beneficial as it is unbiased in reviewing the company's financials. External auditing is independent compared to an internal audit, which helps to deliver direct and honest reports.

· Internal Audits- The company or organization hires internal auditors, and the reports are directly given to the authorities. Internal auditors follow company rules and regulations while auditing instead of the standard set of rules and regulations. Internal auditors help find the company with their management flaws, internal controls, and flawsin financial reports.

· Internal revenue Service Audits (IRS) -This audit is done to check the accuracy of the taxpayer's return and other specific transactions. However, IRS audits are seen as unfavourable, which is necessarily not the case. The company is randomly chosen.

There are several steps involved in auditing. Four main steps are

· The first is to define the auditor's role and terms of engagement which the client signs.

· The second step is to plan the audit, including details and deadlines the auditor has to meet.

· The third step is to compile information from the audit, then systematically make a report.

· Fourth and the primary step is to report the result documented in the auditor's reports.

Auditing is a massive part of doing secure business and of dealing with any probable outcome. As long as you maintain rules and regulations, auditing will only give you a clean report to strengthen your business.