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The most general definition of an audit is an evaluation of a person, organization, system, process, project or product. Audits are performed to ascertain the validity and reliability of information, and also provide an assessment of a system's internal control. Auditing is therefore a part of some quality control certifications such as ISO 9001. The goal of an audit is to express an opinion on the person/organization/system etc. under evaluation based on work done on a test basis. Due to practical constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, random sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements - a concept influenced by both quantitative and qualitative factors. Look up audit in Wiktionary, the free dictionary. ... Image File history File links Gnome-globe. ... In logic, the form of an argument is valid precisely if it cannot lead from true premises to a false conclusion. ... Reliability concerns quality or consistency. ... For the Jurassic 5 album, see Quality Control (album) In engineering and manufacturing, quality control and quality engineering are involved in developing systems to ensure products or services are designed and produced to meet or exceed customer requirements. ... ISO 9000 specifies requirements for a Quality Management System overseeing the production of a product or service. ...

Traditionally audits were mainly associated with gaining information about financial systems and the financial records of a company or a business (see financial audit). However recently auditing has begun to include other information about the system, such as information about environmental performance. As a result there are now professions that conduct environmental audits. A financial audit, or more accurately, an audit of financial statements, is the examination by an independent third party of the financial statements of a company or any other legal entity (including governments), resulting in the publication of an independent opinion on whether or not those financial statements are relevant... Environmental audits are intended to quantify environmental performance and environmental position. ...

In financial accounting, an audit is an independent assessment of the fairness by which a company's financial statements are presented by its management. It is performed by competent, independent and objective person or persons, known as auditors or accountants, who then issue a report on the results of the audit. It has been suggested that Accounting scholarship be merged into this article or section. ... Accountant, or Qualified Accountant, or Professional Accountant, is a certified accountancy and financial expert in the jurisdiction of many countries. ... The Auditors report is a formal opinion, or disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit or evaluation performed on a legal entity or subdivision thereof (called an “auditee”). The report is subsequently provided to...

Such systems must adhere to generally accepted standards set by governing bodies that regulate businesses. It simply provides assurance for third parties or external users that such statements present 'fairly' a company's financial condition and results of operations.

Financial audits

Main article: Financial audit

An important type of audit is the financial audit. It is designed to determine whether financial statements are fairly presented in accordance with International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). In the United States, financial audits are required for all publicly registered companies. A financial audit, or more accurately, an audit of financial statements, is the examination by an independent third party of the financial statements of a company or any other legal entity (including governments), resulting in the publication of an independent opinion on whether or not those financial statements are relevant... A financial audit, or more accurately, an audit of financial statements, is the examination by an independent third party of the financial statements of a company or any other legal entity (including governments), resulting in the publication of an independent opinion on whether or not those financial statements are relevant... International Financial Reporting Standards (IFRS), often known by the older name of International Accounting Standards (IAS) are a set of accounting standards. ... Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting. ...

In addition, financial audits may be performed for private companies, registered charities, and some governmental and public entities. Certain forms of private companies are required to have an external audit. Private companies typically request financial audits year after year because lenders may have required an audit or owners may want to have external unbiased eyes look at the financial statements to determine if the company is complying with all the required accounting principles. Charities would require a financial audit to show the financial status of the organization to potential donors. Governments and government businesses are usually required to be audited by statutes to determine if all the money budgeted has been properly spent. Government financial reports are not always audited by outside auditors. Some governments have elected or appointed auditors.

Other than testing the reliablility of a firm's controls, financial audits can alert management to weaknesses in the firm's controls, as well as suggest operational improvements that could be undertaken. These are highlighted in the Management Letter from the auditors. Strategic systems auditors provide a top down approach to auditing by first examing a firm's business strategy and keys to competitive advantage.

Integrated audits

In the US, audits of publicly-listed companies are governed by rules laid down by the Public Company Accounting Oversight Board (PCAOB). Such an audit is called an Integrated Audit, and auditors have the additional responsibilities of expressing opinions on management's assessment of the firm's internal control, and on the effectiveness of internal control over financial reporting based on their (the auditors') own assessment. These requirements are consistent with Section 404 of the 2002 Sarbanes-Oxley Act.

Types of auditors

There are two types of auditors:

• Internal auditor- are employees of a company hired to assess and evaluate its system of internal control. To maintain independence, they present their reports directly to the Board of Directors or to Top Management. They provide functional operation to the concern. Internal Auditors are employees of the company so that they can easily find out the frauds and any mishappening.

• External auditor are independent staff assigned by an auditing firm to assess and evaluate financial statements of their clients or to perform other agreed upon evaluations. Most external auditors are employed by accounting firms for annual engagements. They are called upon from the out side of the company.

... An External auditor is an audit professional who performs an audit on the financial statements of a company, government, individual, or any other legal entity or organization, and who is independent of the entity being audited. ...

Major auditing firms

The four largest accounting firms in the world; are collectively referred to as the Big Four. They are as follows: The Big 4, sometimes written as the Big Four, is a group of international accountancy and professional services firms that handles the vast majority of audits for publicly traded companies as well as many private companies. ...

1. PricewaterhouseCoopers, also known as PwC
2. Deloitte Touche Tohmatsu, also known as Deloitte
3. Ernst & Young, also known as E&Y
4. KPMG, formerly known as Klynveld Peat Marwick Goerdeler

There are many other audit firms competing with the big four for major audit engagements. Competition has intensified in response to independance issues and other legislative requirements introduced as a consequence of the Arthur Anderson Scandal. In the US and Australia, these firms are referred to as "mid-tier". Some of these include: McGladrey & Pullen, Grant Thornton, PKF, Pitcher Partners, Johnson Lambert & Co. LLP, Beard Miller Company LLP(bmc), and BDO Seidman. A PwC office building (Southwark Towers) in London, England. ... Deloitte & Touche (also referred to as Deloitte Touche Tohmatsu, and branded as Deloitte. ... Deloitte Touche Tohmatsu is one of the Big Four auditors. ... Ernst & Young is one of the largest professional services firms in the world, and one of the Big Four auditors, along with PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu (Deloitte) and KPMG. Ernst & Young is a global organization consisting of many member firms. ... KPMG is one of the largest professional services firms in the world. ... Grant Thornton LLP encompasses the US operations of Grant Thornton International, one of the largest accounting organizations outside of the Big Four (Deloitte Touche Tohmatsu, Ernst & Young, KPMG, and PricewaterhouseCoopers). ... PKF (Pannell Kerr Forster) is a global network of professional services firms. ... BDO Seidman, LLP is the United States arm of BDO International, one of the largest accounting firms outside of the Big Four. ...

In the UK the medium sized firms are also referred to as mid-tier. Many of these firms are international and increasingly are competing for work against the big four, especially following the recent large auditing scandals.

Auditing firms around the world

While the four major audit firms listed above provide audit services to the largest corporations in America, audit firms around the world are also in partnership with the Big Four. Since corporations held offices in other parts of the world, they tend to be audited by affiliates of the Big Four to maintain consistency and uniformity in their application of auditing standards.

See also

• Academic audit
• Auditor's report
• Single Audit
• Audit risk
• Clinical audit
• Computer security audit
• Conformity assessment audit (ISO, HACCP, JCAHCO)
• Environmental audit
• Financial audit (the oldest)
• Information technology audit
• Internal audit
• Performance audit
• Scientology auditing
• Software audit
• Telecommunication audit
• ``Why are Auditors needed``
• ``Audit Planning and Controls``
• Benford's Law

This article does not cite any references or sources. ... The Auditors report is a formal opinion, or disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit or evaluation performed on a legal entity or subdivision thereof (called an “auditee”). The report is subsequently provided to... The Single Audit, also known as the OMB A-133 audit, is a rigorous, organization-wide audit or examination of an entity who expends $500,000 or more[1] of United States Federal assistance (commonly known as Federal funds, Federal grants, or Federal awards) received for its operations. ... Audit risk is a term that is commonly applied in relation to the audit of the financial statements of an entity. ... Formally introduced in 1993 into the United Kingdoms National Health Service, (NHS), clinical audit is defined as, a quality improvement process that seeks to improve patient care and outcomes through systematic review of care against explicit criteria and the implementation of change. The key component of clinical audit is... A computer security audit is a manual or systematic measurable technical assessment of a system or application. ... Conformity assessment is any activity to determine, directly or indirectly, that a process, product, or service meets relevant standards and fulfills relevant requirements. ... Environmental audits are intended to quantify environmental performance and environmental position. ... A financial audit, or more accurately, an audit of financial statements, is the examination by an independent third party of the financial statements of a company or any other legal entity (including governments), resulting in the publication of an independent opinion on whether or not those financial statements are relevant... An information technology (IT) audit or information systems (IS) audit is an examination of the controls within an entitys Information technology infrastructure. ... Internal auditing is a profession and activity involved in advising organizations regarding how to better achieve their objectives. ... bullshit ... This article is in need of attention. ... A software audit is an investigation of the software installed on the computers in an organisation with the purpose of ensuring that it is all legal and authorised and to ensure that its process of processing transactions or events is correct. ... In telecommunication, the term audit has the following meanings: 1. ... A logarithmic scale bar. ...

External links

• National Information Assurance (IA) glossary
• Internal Audit Knowledge Center & Free Source for Audit
• Glossary of auditing terms
• National Information Assurance (IA) glossary

Articles

• Why Didn't Our Auditors Find the Fraud?