An audit is a form of investigation. It’s an independent review of your business’s finances, operations, and compliance with laws and regulations. An auditor examines your books and records to see if they’re accurate and complete. If you are business owner knowing about audits is just as important as knowing about things like the hsn code for labour charges. Here we try to simplify the audit process and explain to you its different aspects. – types of audit
Audits have many purposes:
- They can help you improve your business processes by identifying problems that need fixing. For example, an audit might reveal that a supplier is charging you more than your competitors for an important ingredient — which means you can negotiate better terms with them or find a new supplier altogether.
- They can help you avoid legal trouble by making sure that everything’s on the up and up to about taxes, employment law, environmental regulations, and other areas where the law requires businesses to follow certain rules.
- They can protect your business assets by showing you where there are weak points in security (like where someone could steal cash or sensitive information).
What are the different types of audit?
- Quality assurance audits- types of audit
These involve assessing whether an organization’s processes and procedures are effective, efficient and reliable in meeting customer needs. They can also identify ways to improve performance in areas such as product quality or service delivery. Quality assurance audits may be conducted internally or by external professionals using specialized skills and knowledge.
- Environment, health & safety (EH&S) audits
EH&S audits aim to ensure that employees’ health, safety and well-being are protected from any risks related to their work environment. They may include evaluating risks from chemicals, radiation exposure or other hazards like noise levels, electrical hazards or ergonomic issues — things that could result in injury or illness for workers who don’t take precautions against them. EH&S auditors can be internal or external consultants who specialize in workplace safety issues; they may also work for government agencies.
- Internal Audit
Internal audits are performed by accounting professionals who work within a company. Internal auditors review financial transactions and other business processes to assess whether they comply with company policies and procedures, as well as federal and state laws. They also check to make sure that all transactions have been recorded accurately and completely in an organization’s accounting system. The goal of an internal audit is to improve operations by identifying areas where improvements need to be made so that risks can be managed more effectively.
- External Audit
An external audit refers to an audit that is performed by an independent third party that has no affiliation with the company being audited. External auditors typically have no prior knowledge about the company or its operations, which allows them to assess its financial statements objectively without any preconceived notions about how things should look when performing their review. They examine everything from management’s decision-making skills to the effectiveness of internal controls. The goal is to assure that a company’s financial statements are prepared following generally accepted accounting principles (GAAP).
- GST audit
A GST audit is a very important part of your business. It helps you in understanding your business better and improving its efficiency. GST audits are conducted by the government to ensure that all taxable persons comply with GST laws and regulations. It is a process of examination of records, returns and other documents maintained by a taxable person. Additionally you also get a chance to identify any discrepancy in the accounting record. Since it’s absolutely crucial for a business you should check the gst audit applicability of your company.
- Income tax audit
An income tax audit is a review of a taxpayer’s tax return for accuracy and completeness. The purpose of an income tax audit is to determine whether or not the taxpayer has correctly reported income, deductions and other items on their income tax returns.
