“Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria” (Arens A., Elder R. J., Beasley M. S. 2010). Auditing of a company should be done by an independent person that has no affiliation with the company that is being audited. The auditor needs to be educated enough to process the audit.
There are three different types of auditors, external, internal, and government. The external is the independent person that has no affiliation to the company. The audit they perform on the financial statements allows the general public and investors to see the whole picture on how the company is financially doing. The internal auditors are part of the organization in which they are auditing. They still have to follow the same guidelines as external auditors but their goal is to seek out any risk in practices. The “government accountability office auditor is an auditor working for the U.S. Government Accountability Office (GAO), a non partisan agency in the legislative branch of the federal government” (Arens A., Elder R. J., Beasley M. S. 2010). This position is responsible for auditing Congress.
“Accounting is the recording, classifying and summarizing of economic events for the purpose of providing financial information used in decision making” (Arens A., Elder R. J., Beasley M. S. 2010). Where in auditing it is defined as “determining whether recorded information properly reflects the economic events that occurred during the accounting period” (Arens A., Elder R. J., Beasley M. S. 2010). Accounting has goals of providing reliable financial information that has been gathered over a period of time. This will show the companies assets and liabilities. The auditor will examine these entries and see if everything is accurately presented. The auditor will verify that the company is following the GAAP.
Assurance services “is an independent professional service that improves the quality of information for decision makers. Assurance services can be preformed by CPAs or by a variety of other professionals” (Arens A., Elder R. J., Beasley M. S. 2010). There are different assurance services that the auditor can offer. One of the services is the attestation service. “An attestation service is a type of assurance service in which the CPA firm issues a report about the responsibility of another party” (Arens A., Elder R. J., Beasley M. S. 2010). Some examples of assurance services are “Electronic commerce assurance that systems and tools used in electronic commerce provide appropriate data integrity, security, privacy, and reliability. Information system reliability assurance that an entity’s internal information systems provide reliable information for operating and financial decisions. Performance measurement assurance that an entity is measuring the critical success factors that will allow it to assess progress being made in achieving specific targets linked to the entity’s vision. Risk assessment assurance that the entity’s profile of business risks is comprehensive and evaluation of whether the entity has appropriate systems in place to effectively manage those risks. CA Eldercare assurance that specified goals regarding the elderly is being met by various caregivers” (Louwers T., Ramsay R., Sinason D., & Strawer J. 2010) There are many different types of audits that take place but the main three are financial statement, operational, and compliance audits. The financial statement audits are when the auditor takes a look at the financials compiled over the year. The auditors are trained to make sure the company is following the GAAP. The reason for this audit is to protect the investors and employees by showing the real picture of the company’s finances and worth. Operational audit is a review of the organizations activities. This can help the...