Most audit processes take a top-to-bottom approach. However, some companies may also conduct a horizontal audit, which differs in approach. On top of that, it also seeks to achieve a different objective than vertical audits. Companies use both types to identify potential improvements across departments and processes. Horizontal audits can …

Shareholders authorize auditors to examine a company’s financial statements under an audit engagement. In most cases, auditors seek to ensure the subject matter is free from material misstatements. On top of that, they also assess whether it adheres to standards or other regulatory frameworks. This process is crucial to ensure …

Conducting external audits is often mandatory for companies under the law or standards. However, companies may also perform these audits for other parts of their business or specific purposes. These entail obtaining the services of an auditor. Companies must understand the type of auditor they need to conduct audits. Before …

An audit involves the examination of a subject matter based on suitable criteria. In most cases, the subject matter is the financial statements prepared by a client. On the other hand, the suitable criteria may come from auditing standards or regulatory frameworks. Usually, each of these elements comes from auditing …

Auditing involves examining a subject matter to ensure it meets some predefined criteria. Usually, it requires independent auditors who assess a client’s financial statements against accounting and other regulatory frameworks. Based on their work, auditors provide an audit report that includes their conclusion and opinion of the subject matter. While …

One of the critical areas during audits is stock and inventory. For most clients, these constitute a significant portion of current assets. On top of that, they may include items with complex accounting adjustments. Some clients also hold inventory that requires specialized valuation. These issues complicate the auditing of inventory …

Auditors examine a client’s records to ensure they meet specific criteria. Usually, it includes the financial statements backed by the general ledger. Sometimes, auditors disagree with some entries passed in the client’s records. In these cases, auditors may provide some adjustment entries to the client, known as audit adjustment. What …

The primary objective of audits is for the auditors to provide a report on a given subject matter. This report contains the auditor’s opinion of whether the subject matter includes material misstatements. Depending on the type of audit engagement, it may also provide other conclusions. Auditors base their opinion on …

Auditors collect sufficient appropriate audit evidence to provide their opinion on a subject matter. Based on this opinion, users can make various decisions. Therefore, auditors must consider the trust users put in their work. If auditors fail to perform their tasks effectively, they may face legal repercussions. These fall under …

Audit procedures allow auditors to check various assertions. These assertions may relate to account balances or a class of transactions and events. Similarly, it entails collecting audit evidence that auditors can use to form a conclusion regarding the subject matter. One of the most common audit procedures auditors utilize within …