What You Need to Know about Auditing

Audits are retrospective, independent checks on an organisation’s financial situation. They are often a legal requirement and are usually carried out as part of a team at the client’s premises.

An auditor will assess the client’s systems and records for accuracy, honesty and risk. 

Where audits are not required by law, many companies opt to have their financial information assured independently by accountancy firms.

Overall, auditing is a more specialized field of accounting but the two go hand in hand. This means that auditors cannot be totally unaware of accounting rules. In fact, auditors must be qualified and competent in accounting in order to properly conduct an audit. 

There are basically two types of auditors: external auditors and internal auditors.

External auditors refer to public accountants who take on different clients and perform the audit together with an engagement team. As mentioned before, these are the usual public accounting firms such as the Big Four firms that audit large public companies in addition to large private companies. External auditors are employees of the accounting firm they are associated with and only interact with their clients through the audit process.

Internal auditors, on the other hand, are actual employees of the company. Their role is to perform general auditing procedures all year to ensure that all accounting and record-keeping are being done properly so that the external audit becomes more feasible. Internal auditors usually exist only in large companies.