TYPES OF AUDITS

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TYPES OF AUDITS

Operational
PURPOSE: To evaluate whether operating procedures are efficient and effective USERS: Management of the organization
NATURE: Highly non-standard; often subjective
FREQUENCY:
PAs: Frequently
AGs: Frequently
CRA: Never
Internal: Frequently

Compliance
PURPOSE: To determine whether the client is following specific procedures set by higher authority USERS: Authority setting down procedures, internal or external NATURE: Highly non-standard; often subjective

FREQUENCY:
PAs: Occasionally
AGs: Frequently
CRA: Always
Internal: Frequently

Financial Statements
PURPOSE: To determine whether the overall financial statements are presented in accordance with an acceptable financial reporting framework USERS: Different groups for different purposes—many outside entities NATURE: Highly standardized

FREQUENCY:
PAs: Almost always
AGs: Occasionally
CRA: Never
Internal: Never

TYPE OF AUDITORS – SCOPE
PAs: Perform audits in accordance with auditing standards of published financial statements prepared in accordance with GAAP or IFRS OAG: Perform compliance or operational audits in order to assure the Parliament of the expenditure of public funds in accordance with its directives and the law CRA: Perform compliance audits to enforce the federal tax laws as defined by Parliament, interpreted by the courts, and regulated by the Income Tax Act Internal: Perform compliance/operational audits to assure management or BOD that controls and policies are properly and consistently developed, applied and evaluated

No report < Review Report < Audit = lower information risk
Annual Loan Cost = Cost of PA Services + Annual Interest
An audit provides many benefits (detects errors/fraud, suggestions for improvement, etc.) Knowledge of e-commerce technologies/strategic understanding of clients’ business increases the value of the audit by enabling audit to reduce # of auditing steps and quantity of substantive testing

CHAPTER 2!!!...
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