Types of Financial Audits

Types of Financial Audits

Financial audit can be broadly categorized into External audit, internal audit, Government audit, & Tax audit.

1.    External Audit

External audit is conducted by the commercial auditor and these auditors are appointed by the equity holder or shareholder. External audit is conducted as per the requirement of international auditing standards. External auditor issue a report over the accuracy of financial statement.

2.    Internal Audit

Internal audit is conducted by the internal auditor. Internal audit is appointed by the management. Internal audit is conducted to check compliance of financial rules/policies by finance department during the processing of financial transactions. Internal Auditor submits report to management.

3.    Government Audit

Audit of various public departments is conducted by the government audit department. Government auditor checks, whether or not, the funds have been utilized as per Government prescribed rules. Government auditor submits report to legislative body.

4.    Tax Audit

Audit tax is performed by the tax department. Tax audit is conducted to calculate the tax payable by the company. Companies may try to understate their income to save tax; therefore tax audit is conducted to assess actual income of companies.