General Understanding of Audit, Objectives, Types and Audit Standards
Table of contents
Actually, what is an audit? Definition of Audit is the activity of collecting and examining evidence related to information to determine and make a report about the level of conformity between information and the criteria specified.
Generally checks or audits are carried out on financial statements, various accounting records, and supporting evidence made by the management of a company. The auditing process is carried out by the auditor, namely someone who has the competence to audit and is independent.
The purpose of the audit is to verify the subject of the audit whether it is in accordance with regulations, standards, and methods agreed upon by the company.
In order to better understand what an audit is, we can refer to the opinions of some experts. The following is the meaning of the audit according to experts:
According to Arens and Loebbecke, the notion of audit is the activity of collecting and evaluating evidence regarding information to determine and report the degree of conformity between information and predetermined criteria where the audit process is carried out by competent and independent people.
According to William F. Meisser, Jr., the notion of audit is a systematic process with the aim of evaluating evidence regarding actions and economic events to ensure the degree of conformity between assignments and predetermined criteria, the results of the assignment are communicated to interested parties.
According to the PSAK, the notion of audit is a systematic process that aims to evaluate the evidence collected on statements or assertions about various economic actions, events and see the level of relationship between statements or assertions with reality, and communicate the results to those concerned.
Audits carried out certainly have a specific purpose. Referring to the audit definition above, while the audit objectives are as follows:
An audit is carried out to ensure that all transactions that have occurred have been recorded or entered into the journal with all its completeness.
The audit activity also aims to ensure that all estimated transactions and balances are well documented, the calculations are correct, the amounts are correct, and are classified according to the type of transaction.
With the audit, the recording of all assets and obligations has an existence in accordance with a certain date. In other words, all transactions recorded are in accordance with the actual event.
Audit activities also aim to ensure that all generally accepted accounting principles are applied correctly.
Audit aims to ensure that all transactions recorded in a journal are classified according to the type of transaction.
The audit activity also aims to ensure that the recording of transactions is carried out according to the correct date, the details in the account balance are in accordance with the ledger numbers, and the balance sum is done correctly.
Audit aims to ensure that all transactions that are close to the balance sheet date are recorded in the appropriate period. Recording of transactions at the end of the accounting period is very likely to occur misstatement.
The audit also aims to ensure that the account balance and related disclosure requirements are well presented in the financial statements and there are reasonable explanations for the contents and footnotes of the reports made.
In general, audits can be divided into 2 groups, namely the type of audit based on audit and the type of audit based on the area of examination:
There are two standards for auditing, namely general standards and field standards. Here’s the explanation:
From the reviews above, hopefully you understand what the definition of audit, audit objectives, types of audits, and audit standards are good. Hopefully this brief review is useful and adds to your insight.