Types of Auditing

1. E.Content: Types of Audits: https://youtu.be/3LVgtroCsC0?t=8 What are the
different types of audits?
1. Internal audits
2. External audits
3. Financial statement audits
4. Performance audits
5. Operational audits
6. Employee benefit plan audits
7. Single audits
8. Compliance audits
9. Information system audits
10. Payroll audits
11. Forensic audits
1.Internal Audits
Internal audits assess internal controls, processes, legal compliance, and the protection of assets.
The internal audit process can be a helpful tool for businesses to evaluate risk and identify
actionable ways to improve performance.
2.External Audits
A third party – such as an independent CPA firm – conducts external audits. Once the audit is
complete, a report is distributed to shareholders and stakeholders outside of the organization.
While external audits may vary in what they audit (financial statements, usage of federal funds,
etc.), the main benefit is the independence and objectivity of the audit team. This gives
shareholders and external stakeholders more confidence in the audit process and report.
3.Financial Statement Audits
Financial statement audits involve independent auditors who will report on whether a company’s
financial statements align with the applicable financial reporting standards. Auditors are
required to accomplish three things:
1. Identify and assess risks of material misstatement, whether due to fraud or error
2. Obtain sufficient audit evidence about whether material misstatements exist
3. Form an opinion on the financial statements or determine that an opinion can’t be formed
4.Performance Audits
Performance audits cover a wide variety of assessments. An entity may request or require a
performance audit to evaluate any of the following objectives:
1. Program effectiveness and results

2. 2. Internal controls
3. Compliance with certain requirements
4. Prospective analysis
5. Operational Audits
Operational audits review an organization’s activities in relation to specific objectives. An
auditor will analyze processes, procedures, and systems; and evaluate operational
effectiveness, efficiency, and productivity. Benefits of an operational audit include
finding opportunities for improvement and developing recommendations.
6. Employee Benefit Plan Audits
An employee benefit plan (EBP) audit analyzes and evaluates your benefit plan’s financial
statements. This type of audit can highlight opportunities for improvement within plan
operations, efficiencies, controls, and how well the plan complies with select
regulations. Independent public accountants are the only professionals qualified to
perform employee benefit plan audits.
7. Single Audits
Single audits are report cards. They inform federal agencies if there are problems with how
grantees use federal funds. Single audits are highly complex as auditors must perform
the audit in accordance with GAAS and GAGAS. Plus, the auditor must review the
entire entity’s compliance and internal controls, not just a specific division or program.
8. Compliance Audits
A compliance audit is when an entity is audited to determine if it complies with a
government’s rules, standards, and requirements. A government sets the requirements
and hires an auditor to evaluate the entity’s compliance with them.
9. Information System Audits
Information system audits evaluate the management controls within a company’s
information technology (IT) infrastructure. An audit will determine if the systems are
safeguarding assets, maintaining data integrity, and operating effectively. Businesses can
benefit from this type of audit because it can help identify opportunities and risks, align
assessment and strategy, and improve business procedures. Businesses can choose to
have these audits conducted independently or during a financial statement or internal
audit.
10. Payroll Audits
Payroll audits review payroll processes and reports. An audit can help identify errors,
improve compliance, and protect the business from fraud. An internal auditor or a third-
party auditor – like a CPA – can perform payroll audits.

3. 11. Forensic Audits
A forensic audit examines a company’s financial records to identify illegal finance activity. The
auditor – a forensic accountant – will look for evidence that may be used in court or for conflict
resolution among shareholders.