Types of Audits

TYPES OF AUDITS

Operational

* PURPOSE: To evaluate whether operating procedures are efficient and effective

* USERS: Management of the organization

* NATURE: Highly non-standard; often subjective

* FREQUENCY:

* PAs: Frequently

* AGs: Frequently

* CRA: Never

* Internal: Frequently

Compliance

* PURPOSE: To determine whether the client is following specific procedures set by higher authority

* USERS: Authority setting down procedures, internal or external

* NATURE: Highly non-standard; often subjective

* FREQUENCY:

* PAs: Occasionally

* AGs: Frequently

* CRA: Always

* Internal: Frequently

Financial Statements

* PURPOSE: To determine whether the overall financial statements are presented in accordance with an acceptable financial reporting framework

* USERS: Different groups for different purposes—many outside entities

* NATURE: Highly standardized

* FREQUENCY:

* PAs: Almost always

* AGs: Occasionally

* CRA: Never

* Internal: Never

TYPE OF AUDITORS – SCOPE

* PAs: Perform audits in accordance with auditing standards of published financial statements prepared in accordance with GAAP or IFRS

* OAG: Perform compliance or operational audits in order to assure the Parliament of the expenditure of public funds in accordance with its directives and the law

* CRA: Perform compliance audits to enforce the federal tax laws as defined by Parliament, interpreted by the courts, and regulated by the Income Tax Act

* Internal: Perform compliance/operational audits to assure management or BOD that controls and policies are properly and consistently developed, applied and evaluated

No report < Review Report < Audit = lower information risk

Annual Loan Cost = Cost of PA Services + Annual Interest

An audit provides many benefits (detects errors/fraud, suggestions for improvement, etc.)

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