Auditing is a multi-faceted and comprehensive method. Understanding the many categories of audit, which collectively comprise the auditing discipline, can provide an effective insight into the nature of auditing; auditing can be classified from various perspectives. The thorough classification of audit will be discussed as follows.
Classifications of Audit
2. Periodical Audit
3. Interim Audit
4. Occasional Audit
5. Standard Audit
6. Balance Sheet Audit
7. Post and Vouch Audit
1. Continuous Audit
Continuous auditing entails an auditor's continuous scrutiny of all transactions throughout the year. In other terms,it is when a client's accounts are examined continuously across the year or at regular intervals during the financial term. The auditor verifies the accuracy of the financial statements at the conclusion of the financial period and produces a report with minimal delay.
2. Periodical Audit or Final Audit or Complete Audit
After closing the books of accounts and producing the financial statements, an annual or periodic audit is performed. In this situation, the auditor just visits the customers once a year and does a single audit.
The auditor evaluates the validity and fairness of the financial statements by performing a detailed or random review of the transactions that have occurred in the books of accounts. This sort of audit avoids the flaws of continuous auditing and has additional benefits, although extensive inspection is not possible. As a result, errors and scams are difficult to identify.
3. Interim Audit
Interim audits are performed in between yearly audits to determine interim profitability, allowing the corporation to declare an interim dividend. It entails a thorough study of transactions as well as a review of records and accounts up to the date of the interim audit. It's a type of audit that takes place in the middle of two balance sheet audits. It is carried out for a set period with the goal of issuing an interim dividend or determining the value of shares at a specific date.
4. Occasional Audit
Occasional auditing is performed as a one-time event in organisations when routine auditing is not performed. For example, an audit undertaken in a partnership business on a partner's admission or retirement. Occasional audits are also carried out when the government requests a special audit to look into certain issues.
5. Standard Audit
Standard auditing refers to the thorough examination and analysis of a limited number of transactions, with the rest transactions treated to sample auditing if an effective internal control system is in place. In other words, it's a sample check after a thorough and satisfactory inspection of some of the products.
6. Balance Sheet Audit
The word "balance sheet audit" is a product of the United States. It is more common in the United States, but it is rarely used in India and other nations. The auditor verifies the balance sheet items such as capital, liabilities, reserves and provisions, assets, and other things in the balance sheet during a balance sheet audit. The auditor only examines papers that are linked to the items listed in the balance sheet, and does not examine any documents that are unrelated to the balance sheet.
7. Post and Vouch Audit
The term "post and vouch audit" refers to the verification of all transactions from the original input book to the ledger. For each part of the examination, such as posting, totaling, and balancing, the auditor utilises different ticks. The auditor examines the efficacy of the internal control system throughout this audit, and if satisfied, resorts to test checking of various types of transactions.