What is an Audit?

One of the things which many businesses and companies are aware of is the term audit. This is about their tax obligations and their concerns that they may be subjected to an audit by the official tax department. There are several different types of audits however, that can relate to a business.

Record Keeping

An audit is going to involve the review of different types of data as it pertains to a specific audit. There are many different types of records which provide data, and this can include a blockchain ledger. The blockchain ledger makes an audit very simple, removing the gamble of nasty surprises. There are undoubtedly many benefits to this particular type of record. The data cannot be modified and is comprised of transactions that transpire between two parties. Those who are into cryptocurrency will be more familiar with this type of record keeping.

Different Types of Audits

Although companies may be concerned about a tax audit, several different types of audits can be carried out in a company which could afford them all kinds of benefits. Some examples are:

  • Performance Audits:

Most often, this type of audit is done in government agencies or charitable organizations. The audit will focus on the different systems which are being used, as well as the procedures and their respective outcomes. Some of the areas that will receive attention are safety, security, and the compiling of information. These all can be complex, and now accountants are beginning to specialize in each of these categories.

  • Quality Audits:

This type of audit is to ensure the performance of the quality management systems. They often deal with certification criteria. The audit helps to confirm that the conformance requirements are being met and how successful they are. These audits are essential for a company, as they help to identify and reduce problems, which in turn allows for improvements to be made.

  • Project Audits:

Project audits are usually carried out during different phases of the project. This is so potential problems can be identified quickly and corrected. It allows project managers to monitor progress and to see what is working well and what is not. What is learned at the different stages can be applied to future projects. Within this category of audits, there are two sub-categories. These are regular health check audits to determine the state that the project is in at the time. Then, there is the regulatory audit to ensure compliance is being met for that particular project.

  • Operational Audits:

This type of audit focuses on the operational components of the business. The attention here is put on the efficiency of the operations and how effective they are. It also includes the economy of the operation, which is the differences between the benefits of the operation vs the cost of it.

  • Forensic Audits:

These are carried out as an investigative type of audit with the intent on identifying any illegal activities which may be taking place. Such as money that is missing or some kind of fraudulent activity.

These are the more common types of audits outside of the tax audit. Not every company will require all of them. However, every company should be aware of them and implement those which are going to provide some benefit to the well being of the business.